China’s BOE has been forecast to supply small and mid-sized OLEDs to Apple. This is because Apple has followed a strategy to lower parts prices by diversifying its suppliers since it began to produce smartphones with an LCD display.
BOE’s entry into the market implies that a seismic change is being made in the OLED market where Samsung Display has enjoyed a market share of 90% or higher.
In addition to BOE, China Star (CSOT) and EverDisplay are also bent on investing in small- and medium-sized OLEDs, intensifying market competition.
In particular, the display industry is paying more attention to BOE than any other Chinese display company these days. BOE, which has already started mass production of small- and mid-sized OLEDs since the second half of last year, has already been selected as an OLED supplier for the world's third-largest smartphone maker, Huawei.
BOE's OLEDs will be loaded into the Mate 20 Pro, a Huawei flagship smartphone to be launched in the second half of this year, which is drawing much attention as a case that proves BOE’s technological excellence. Moreover, it is said that BOE will build an OLED line for Apple in B11 Factory currently under construction.
It is also a threat to Korean display companies that Chinese display makers which have produced small and medium-sized OLEDs earlier than BOE are aggressively ramping up production. Even if they lag behind Korean companies in terms of technology, they can secure funds for new investment based on the large stable domestic market. In fact, Tianma which shipped 1.3 million units of small and mid-sized OLEDs last year raised its shipment target to 10 million units this year. Visionox plans to ship 20 million units of small- and mid-sized OLEDs this year after shipping 3 million units last year.
Chinese display manufacturers are accelerating the development of human resources and massive investment. BOE is raising its technology level by benchmarking Samsung Display. It is even said that BOE is using the same equipment as Samsung Display. In particular, BOE headquarters and partner companies are reportedly keen on securing competent Korean engineers to such an extent that 2,000 Korean engineers are working at BOE and its partners. China Star is planning to start mass production of sixth-generation flexible OLEDs beginning in 2019 by investing about six trillion won in production facilities only.
In the display industry, experts say that Chinese display manufacturers’ technology and production capacities are not at a level to threaten Samsung Display. However, they expressed concern that OLED panel prices would drop and a supply glut would take place. "It will take at least one or two years for Chinese companies to raise their OLED yields and increase their technological competitiveness," said Seo Won-hyeong, head of the Industry Support Division at the Korea Display Industry Association. "If Chinese display manufacturers catch up with their Korea counterparts in terms of technology, OLED prices may plummet."
According to market researcher HIS Markit, the small and medium-sized OLED market is expected to expand to 600 million units a year this year. Taking into consideration the fact that the small and medium-sized OLED market was 420 million last year, the market is expected to grow 50% this year. In 2018, Samsung Display plans to produce 500 million units, and the remaining companies will produce 92 million. "An increase in the number of competitors in the small and medium-sized OLED market is an opportunity rather than a crisis as the market size will swell," said a representative of Samsung Display. "Samsung's market share may shrink a little but differences in competitiveness due to Samsung’s technological advantage may bring more opportunities to Samsung."