Musing Summary

July 31, 2017 Week

Samsung and LGD released their Q217 financials and both companies fared very well. Samsung had it highest quarterly operating profit reaching KRW8.14 t. OLED revenue continued to grow although Samsung believes the 2nd half mobile sales may experience a slow down.  LGD had revenues of KRW6.629 t and net income was KRW0.737 t up 6% Y/Y. LGD also announced that it would increase its Capex by investing KRW7 t in 1 Gen 8.5 OLED fab in China and a Gen 10.5 fab plus 1 Gen 6 fab in South Korea. There were also reports that the Gen 6 would be subsidized by Apple to guarantee a second source for flexible OLEDs.  Lenovo held its Tech World event last week showcasing a functional version of the Folio, a concept device that is a 7.8-inch Android tablet with a hinge in its middle that allows the whole thing to fold into a 5.5-inch, dual-screen smartphone-style device. Samsung also talked about its upcoming foldable display for a smartphone/tablet, which it expects to release in small volumes in 2019.
 
Apple and Samsung continued to lose share in the Chinese smartphone market as it fell last quarter, as Huawei, Oppo and Vivo were the top 3 brands in China.  Xiaomi snagged the fourth-place spot that was held by Apple, leaving Apple at No. 5, according to Canalys, an independent analyst company. Samsung is also in the top 10-smartphone brands in China, but it dropped to #6.

1. Huawei: 23 million
2. Oppo: 21 million
3. Vivo: 16 million
4. Xiaomi: 15 million
5. Apple:  14 million
6. Samsung: 12 million

Foxconn is becoming a major player in smartphone displays as it reached the #3 position behind Samsung and BOE. Foxconn owns or controls Sharp, Innolux and Century. J.P. Morgan challenged recent reports that the flagship OLED model would be delayed, claiming that it expects the model to arrive at least in limited quantities in time for the usual September launch. GfK reports that based on POS data, global smartphone demand totaled 347 million units in 2Q17, up four percent year-on-year, making it the strongest second quarter on record. China was the largest market in terms of shipments and revenue, followed by Emerging Asia and North America in shipments and North America and Western Europe in revenue. A report earlier this year claimed that Apple would launch the iPhone 9 in two different screen sizes: 5.28-inch and 6.46-inch. Demand for high-end and large-sized panels for TV, IT and business applications was high in the second quarter, allowing AUO to operate at full capacity with satisfactory results, Peng said. AUO posted net profits of NT$9.83 billion (US$323.65 million) or NT$1.02 per share in the second quarter. 
 
Foxconn announced that it would spend $10 billion dollars to build a new LCD TV factory in Wisconsin, USA. The company says that it will be a state-of-the-art plant that will be capable of producing 8K (7680x4320) resolution LCD TV panels. RiTdisplay is expanding its PMOLED capacity having experienced its best quarter in years.  SNU Precision has indicated that they have received a $22.7m order for OLED equipment from Black Cattle Foods, as part of their construction of a Gen 6 OLED fab being built in Kunshan, China.  Apple bought some Gen 2.5 OLED deposition equipment, sending the media in frenzy that Apple wanted to compete with Samsung in OLED displays.  Not yet folks!  LG Innotek may be getting out of LEDs, but they expect to increase production of photomasks, including FMMs. The FFM is expected to grow to US$1.3b, as a set of masks for a 15K Gen 6 fab could cost as much as US$10m. Researchers at Drexel's College of Engineering have discovered a way to make modern batteries a whole lot better by reducing recharge times to mere seconds.

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