In the second quarter of the DSCC's latest release of the OLED Shipment and Fab Utilization report, we saw a significant rebound in Samsung's capacity utilization, from new mobile phone brands such as Apple, Samsung Electronics and other mobile phone brands in China in the second half of the year. Machine needs.
As shown in Figure 1, the capacity utilization rate of Samsung's hard-screen is expected to recover to 80% in June, mainly at the A2 plant, with a monthly input capacity of 175k. The glass input of the A2 plant has gradually increased from the lowest point in February. Mainly from the demand for price reduction of hard-screen OLED. The average selling price of OLED hard screen between 5.5”-6” is expected to drop to US$23 in the third quarter, and the price difference between the corresponding LTPS LCD screens is only about US$5, even in the Chinese market in the second quarter. This price has already appeared. Since the price of OLED mobile phones relative to LTPS LCD screen mobile phones is relatively high, that is to say, the profit from using OLED hard screens to mobile phone manufacturers is even more impressive. Therefore, we believe that the capacity utilization rate of hard-screen OLED factories will still rise in the second half of the year.
Figure 1: SDC’s OLED Fab Utilization
Source: DSCC’sQuarterly OLED Shipment and Fab Utilization Report
In the short term, panel makers including Samsung may be more willing to increase the capacity of hard-screen OLEDs. Although the capacity utilization rate of flexible screen OLED factories is also rebounding, compared with the capacity utilization rate of hard-screen OLEDs, the utilization rate of flexible OLEDs has dropped very rapidly, only 31% in April, and back in May. The bomb hits 37% due to the beginning of the 5.85" Apple screen stocking. In June, the flexible OLED capacity utilization rate increased to 52% mainly for the 6.46" new iPhone X Plus stocking. We believe that the capacity utilization rate of both hard-screen and flexible-screen OLEDs will improve a lot in the second half of the year, and will also bring benefits to material manufacturers and laser manufacturers, such as UDC and Coherent.
An important issue for Samsung's flexible production capacity is how Samsung plans to prepare idle capacity for Apple in the first quarter of 2019, as happened in the first quarter and second quarter of this year. Continued shrinking the price difference between hard-screen OLEDs and LTPS LCDs, as well as more flexible shapes such as foldable and bendable configurations will help to consume idle capacity, and OLED penetration growth will also help in the off-season.
From Figure 2, it can be seen that SDC's revenue in the second quarter fell 16% from the first quarter to a bottom, but it increased slightly by 2% compared with the same period last year, reaching 4.4 billion US dollars. It should be noted that since the module factory is in Vietnam, it takes about two months from the input of the glass substrate to the recognition of the revenue. As a result, the revenue growth from the increase in capacity utilization shown in May and June will be reflected in the third quarter. We expect SDC OLED revenue to grow 52% quarter-on-quarter in the third quarter of this year, up 35% from the same period last year to $6.7 billion. In the fourth quarter, it is expected to continue to grow by 6% to US$7.1 billion compared to the third quarter, but is expected to decline by 11% compared to the fourth quarter of 2017, due to the high price of SDC flexible OLEDs in the fourth quarter of last year. 2018 Overall, we can see that SDC OLED's revenue growth rate of 11% reached 23.4 billion US dollars, compared with the challenges faced in early 2018, they still achieved good revenue results.