Display Capex Forecast Reflects Minor Changes for an Industry Plagued by Over Capacity
DSCC issued their Q3’20 version of its Quarterly Display Capex and Equipment Market Share Report, which upgraded 2019-2024 spending by 5% on an install basis on a number of new fabs added in China. Whatever changes were made reflect the pushing out of investment due to COVID-19. Other than what is already in motion, the display industry has insufficient demand to encourage investment even from the most optimistic participants. Smartphone sales have peaked, TVs are growing at no more than the traditional 1or 2% per year, notebooks and monitors after years of decline are seeing some growth that is believed to be brought on by the virus, which hopefully will end soon. The most discussed application is AR goggles, which if they were ever to be non-intrusive and light enough, while providing all the services promised could decimate the need for displays in general.
China is expected to account for 84% of 2019-2024 LCD and OLED spending. China’s share of LCD spending will be 100% and its share of OLED spending will be 76%. Other highlights include:
- COVID-19 limited Japanese equipment engineers from travelling to China from February to June, but have returned in 2H’20. Canon recently revealed that only 6 of their 35 litho tool shipments were recognized in 1H’20 with 29 or 83% in 2H’20. Nikon indicated it installed 0 tools in Q2’20 and is expected to ship 18 tools over the next 3 quarters. Litho tools take longer to install than other tools.
- The biggest change was at HKC’s H4 fab originally expected to install 90K G8.5 substrates in 2020. Instead, only ~45K substrates worth of equipment installed in 2020, with the remainder delayed to 2021 or later.
- BOE is expected to lead in spending from 2019-2024 with a 23.4% share followed by closely by China Star at 21.9%. SDC with their QD-OLED initiative is expected to be #3 at 11.8% with HKC at 11.0%, Visionox at 8.7%, Tianma at 7.1% and LGD at 7.0%. In OLEDs, BOE;s Capex share was 24% followed by China Star at 20%, SDC at 17%, Visionox at 13% and LGD and Tianma with 10% each.
Figure 1: OLED and LCD Capex Forecast
Figure 2: OLED Capex Forecast; TV vs. Mobile
The difference between move-in and install are widening in 2020 due in part to the quarantining of Japanese equipment engineers as well as HKC’s delay. We reduced 2020 install spending by 17% vs. last quarter and increased 2021 installs by 14%. OLED spending is expected to rise by 96% in 2020 with LCD spending down 30%. Mobile OLED spending will rise by over 240% as many more OLED fabs are equipped in 2020 despite the current oversupply in mobile OLEDs. In terms of equipment spending by application, mobile was 19% in 2019, but it is expected to account for a majority of spending in 2020, 2021, 2023 and 2024. TV spending is expected to decline in 2020 and 2021 before rebounding in 2022 and declining in 2023 and 2024 as OLED TV pending remains lumpy.
- a-Si is expected to hold a slight lead over other backplane technologies with a 31% share with LTPS at 29%, oxide at 24% and LTPO at 14%.
- Flexible is expected to account for 43% of 2019-2024 display equipment spending and 63% of total OLED spending.
- WOLEDs are expected to lead in OLED TV spending from 2019-2024 with a 43% share followed by QD-OLEDs at 35% and RGB IJP OLEDs at 23%.
- By glass size, G6 is expected to lead with a 45% share followed by G8.5/8.6 at 30% and G10.5 at 24%.