Capital expenditures on displays have undergone some retrenchment this year, but are expected to bounce back big next year as a temporary excess in mobile OLED capacity is absorbed and OEMs accelerate their transition away from liquid crystal display (LCD) technology. That’s the conclusion of the latest report from DSCC, titled the Q3’19 Quarterly Display Capex and Equipment Report.
According to the report, spending on display equipment in 2019 will fall 26 percent to $15.8 billion, with OLED spending down 64% to $15.5 billion. LCDs spending has increased this year 23% and accounts for 72 percent of overall display equipment spending.
OLED capacity is absorbed and OEMs accelerate their transition away from LCDs. (DSCC)
An excess of mobile OLED capacity added the last two years is to blame, noted DSCC founder and CEO Ross Young in an e-mail response to FierceElectronics.
“Companies are still ingesting all the mobile OLED capacity they added from 2017 through 2018,” says Young in the e-mail. “Flexible OLED utilization has been poor, below 40% in the first half of 2019 as Apple brought fewer flexible OLEDs than expected, which resulted in a large penalty payment from Apple to Samsung of around $770 million. With Samsung utilization low, they aren’t adding capacity, and it doesn’t make sense for lower tiered suppliers to add much either.”
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But much better times are ahead for OLEDs. There’s still a lot of design activity in mobile OLED displays. Apple is reportedly certifying OLED screens from Chinese company BOE for its future iPhones. Also, the upcoming Fitbit Versa 2 will have an OLED display with integration of Amazon’s Alexa, according to another online report.
According to DSCC, by 2020, display equipment spending is expected to grow 31% to $20.3 billion, with the market split 50/50 between LCD and OLED. LCDs are projected to fall 9% with OLED spending up 132%, due to new fabs in China producing mobile OLED displays coming online.
In fact, LCD spending is expected to fall significantly the next few years, as the TV and the mobile market accelerates their transition to OLED technology. DSCC says 2022 will be the last year for new LCD fab equipment spending. By 2024, OLEDs are expected to account for 100% of display equipment capex.
Mobile displays are expected to account for a larger portion of display spending in coming years, according to DSCC. From 2019 to 2020, the percentage of capex on mobile displays will increase from 9% to 40%. By 2024, mobile displays will account for 86% of display capex.