With memory semiconductor prices surging and triggering electronics and IT device inflation worldwide, growth in the IT OLED (organic light-emitting diode) market for laptops, monitors, and tablets is also hitting a speed bump. Samsung Display and China's BOE, which executed massive capital expenditures on expectations of large-scale demand, are now seen as facing heavier pressure to bring forward operations at their 8.6-generation OLED production lines they had prepared as market game changers, as the possibility of a demand slowdown grows.
As of the 20th, according to the industry, major domestic and overseas market research firms such as Omdia and TrendForce note that the recent rise in memory prices is increasing the share of memory in the cost structures of electronics such as PCs, and if major corporations pass that on to final retail prices, replacement demand could weaken. In particular, if price sensitivity grows in entry-level and mid-to-low-end segments, manufacturers have room to reconfigure their product mix around premium models or adjust launch tempo.
For IT OLED to spread, adoption must expand not only in existing premium segments but also in mid-to-low-end segments to achieve economies of scale. In other words, it would enable the formation of the so-called "volume zone" that companies mention. The two companies had prepared to run their 8.6-generation plants in the second half in line with this trend. But as prices for other components—especially memory—soared to unprecedented levels, manufacturers have also been pushed into a situation where adopting OLED is not an easy choice.
The 8.6-generation OLED plant has been regarded as a key inflection point in the global display market. The 8.6-generation OLED line (typically a 2250×2600mm motherglass) is designed around productivity to make IT panels "cheaper and in larger volumes" than existing plants centered on 6-generation OLED (1500×1850mm). The biggest difference is the size of the motherglass. Market research firms say the 8.6-generation glass substrate is about 2.2 times larger than the mainstream 6-generation, allowing more panels to be produced from the same input, improving production efficiency and lowering manufacturing costs.
However, this presupposes that the IT OLED market will expand and demand will remain solid. In fact, within the IT display market where liquid crystal display (LCD) has been mainstream, OLED's share has steadily grown. Adoption of OLED is increasing in premium laptops and tablets, and demand for OLED is also expanding in gaming and content production monitors.
The issue is speed. TrendForce said the longer memory-driven inflation persists, the lower the demand elasticity for more expensive finished goods containing OLED, and as a result, OLED expansion could become more skewed toward "premium," while diffusion into mid-priced lineups may be delayed. It means large electronics and IT corporations are increasingly likely to reduce or postpone the share of OLED adoption due to the burden of rising production expense.
This environmental shift could directly pressure new line strategies for corporations that have already made large-scale investments, such as Samsung Display and BOE. A representative at a major domestic display maker said, "The 8.6-generation OLED is a next-generation investment targeting mid- to large-size IT panels, and a certain level of stable demand must be in place for a virtuous cycle of lowering costs through improved utilization and Production yield," adding, "If finished goods prices rise and the market wobbles, the risk of demand gaps grows during the initial ramp-up (boosting utilization) phase, making it difficult to decide on line start timing and utilization adjustments."
Meanwhile, the industry suggests the IT OLED market will grow for the time being but is likely to remain centered on premium segments. If memory prices do not ease, the full-fledged blossoming of the OLED market could be delayed. As a result, there is an interpretation that the phase of scaling up IT OLED sizes, on which Samsung Display and BOE had pinned hopes, could be forced to slow by the variable of "soaring memory."