Vertical Divider
Capex for Large Area LCD Fabs Increase While Some S/M OLED Fabs Delayed
DSCC’s latest Quarterly Display Capex and Equipment Market Share Report revealed an increase in LCD equipment spending as market conditions improved in the LCD market. LCD revenues are expected to rise 32% in 2021 to $112B on strong unit and area growth with prices and profitability rebounding to or even exceeding the 2017 levels. DSCC expects two new G8.6 mega fabs being built. Over the last three months, the Chinese added or expanded 14 different LCD investments. The result versus last quarter is a 10% or a $2.2B increase in 2020-2024 LCD spending from $21.8B to $24B.
The outlook for 2022-2024 spending is still significantly lower than in previous years, resulting in tighter capacity and slower price reductions in the next downturn. In addition, with Korean LCD suppliers are expected to reduce their LCD capacity and convert to potentially higher margin OLEDs, the outlook for LCD pricing and profitability looks quite healthy, which may result in even more equipment spending.
OLED equipment spending fell versus DSCC’s prior forecast. Lower-tiered Chinese mobile OLED manufacturers are struggling with their yields which drives utilization, and profitability down. The Chinese government has become more discerning and is slowing the financing resulting in a number of fab delays and one cancellation. OLED equipment spending on an install basis is expected to decline double-digits in 2021, 2022 and 2023, but surge in 2025 on investment delays. Total 2020-2025 OLED equipment spending on an install basis is expected to fall 2% or $1.2B versus our last forecast to $49B.
Despite the reduction on OLED spending and the increases in LCD spending, OLED share of display capex on an install basis was 62% in 2020 and is expected to grow annually to reach 85+% in 2024 and 2025, when LCD capex will only be for maintenance.
Figure 1: AMOLED/LCD Equipment Spending Forecast (Install Basis)
DSCC’s latest Quarterly Display Capex and Equipment Market Share Report revealed an increase in LCD equipment spending as market conditions improved in the LCD market. LCD revenues are expected to rise 32% in 2021 to $112B on strong unit and area growth with prices and profitability rebounding to or even exceeding the 2017 levels. DSCC expects two new G8.6 mega fabs being built. Over the last three months, the Chinese added or expanded 14 different LCD investments. The result versus last quarter is a 10% or a $2.2B increase in 2020-2024 LCD spending from $21.8B to $24B.
The outlook for 2022-2024 spending is still significantly lower than in previous years, resulting in tighter capacity and slower price reductions in the next downturn. In addition, with Korean LCD suppliers are expected to reduce their LCD capacity and convert to potentially higher margin OLEDs, the outlook for LCD pricing and profitability looks quite healthy, which may result in even more equipment spending.
OLED equipment spending fell versus DSCC’s prior forecast. Lower-tiered Chinese mobile OLED manufacturers are struggling with their yields which drives utilization, and profitability down. The Chinese government has become more discerning and is slowing the financing resulting in a number of fab delays and one cancellation. OLED equipment spending on an install basis is expected to decline double-digits in 2021, 2022 and 2023, but surge in 2025 on investment delays. Total 2020-2025 OLED equipment spending on an install basis is expected to fall 2% or $1.2B versus our last forecast to $49B.
Despite the reduction on OLED spending and the increases in LCD spending, OLED share of display capex on an install basis was 62% in 2020 and is expected to grow annually to reach 85+% in 2024 and 2025, when LCD capex will only be for maintenance.
Figure 1: AMOLED/LCD Equipment Spending Forecast (Install Basis)
Total display equipment spending for 2021 up 39% on an install basis to $16.6B, which is how most Japanese equipment companies recognize revenues. On the other hand, it is expected to be down 24% to $12B on a move-in basis which is how equipment companies in other regions recognize revenues. For 2020-2025, the growth will be similar through, up ~1.5% to $73B on an install basis and $70B on a move-in basis.