Samsung Electronics Company (SEC) announced its 2011 earnings at KRW 160 Trillion and operating revenue KRW 16 Trillion (Figure 1). Korean financial analysts estimated SEC’s Q1’2012 revenue and operating revenue at KRW 45 Trillion and 5.8 Trillion, respectively. SEC’s smartphone business contributed significantly to raise both revenue and operating revenue. While the LCD display industry has experienced losses over the last two years, SEC has been increasing the level of vertical integration within the group in the smartphone business, using SMD’s AMOLED display with its superior image quality and slim physical design. It is estimated that the company has sold 70+ million smartphones out of 280 million mobile phones in 2011. In Q4’11, over 20 million Galaxy S and S2 models were sold and SEC sold 5 million Galaxy NOTE, which uses a 5.3” Super AMOLED HD display, within 5 months of its release. SEC’s smartphone shipments are expected to surpass Apple’s iPhone in Q1’2012, shipping 41 Million units in Q1’2012 while the goal for 2012 is 180 million of smartphones in 2012. The leadership in smartphone sales is likely to switch between Apple and Samsung depending on the release dates of new products.
Figure 1 2011 SEC Revenue and Operating Revenue
Source: Maeil Economy, OLED-A
Even though Apple and Samsung have a number of cross suits, SEC remains a major component suppliers for Apple , even while teaming up with Google for Android OS for software and SMD for AMOLED for displays. Due in large part to SEC’s strong smartphone business, Samsung Mobile Display (SMD) reached a record operating income of KRW 869.9 Billion for 2011, jumping 143.2% from KRW357.7 Billion in 2010. Revenue was up 48% to KRW6.6 Trillion. It is expected that SMD will hit operating revenues of KRW 306 Billion in Q1’2012. In 2012, SMD’s expects operating revenue of KRW 1.47 Trillion, up 64% up Y/Y. Apple’s retina display >300 ppi created a challenge for SMD to reach 300 ppi, which was difficult for SMD due to the limits of the Fine Metal Mask (FMM) and the need for 5-6 TFTs for compensation. SMD employed 3 TFTs and used the Pentile pixel layout for its high density displays, but Pentile was criticized for its handling of characters. In 2011, SMD supplied three AMOLED displays, a 4.3” Super AMOLED plus with 217 ppi, a 4.65” Super AMOLED HD with 285 ppi and 5.3” Super AMOLED HD with 285 ppi that lead Galaxy smart devices. The designation Super AMOLED Plus means a side by side pixel configuration. SMD is planning to release a 4.6” Super AMOLED HD Plus with the 319 ppi for the Galaxy S3 Super AMOLED plus in May of this year. In addition, SMD is expected to add phosphorescent green, which will reduce power consumption and make the OLED display competitive with the retina display at white levels of 40%, while significantly outperforming LCDs for images and video. The Apple iPhone 5 should be released about the same time as the Galaxy S3. Both of the new phones should have comparable size and pixel density so a true comparison can be made.
The success on Galaxy smartphone has promoted increased usage of AMOLED displays, from smartphones to handheld game devices and tablet PCs. SEC demonstrated that using AMOLED would have a value-added effect on their mobile brand. As recently reported by OLED-A; Nokia, HTC, Huawei and Panasonic will be using AMOLED displays in their smartphones. More recently, it was reported that Sony was providing OLED technology and assistance to AUO while tying up the company’s complete AMOLED production in 2012 and 2013.
The trends in smartphone market share are shown below. The smartphone market is largely divided into two groups - iOS and Android OS as the new Microsoft mobile OS has not had enough time to make an impact. The iPhone has been the leading smartphone since Q3’08; however, Samsung’s Galaxy smartphone has shown a steady and strong growth since Q2’2010 and actually took the lead in Q3’11 only to fall behind the iPhone in Q4’11. Up until mid-2011, AMOLED smartphone displays were supply constrained, but with the move to mass production of SMD’s Gen 5.5 Line A2 Phases 1 and 2 and the soon to be operational Line A2 Phase 3 and Line A3, SMD has the capacity to meet SEC’s needs as well as the other smartphone manufacturers, except Apple. The rumor about Apple adopting AMOLED display has been floating around each time that Apple is about to launch a new iPhone; however, it is unlikely that Apple will convert to AMOLEDs as long as there is only one source of supply.
Figure 2 Smartphone Market Share by Brand
Source: IDC, Macquarie Security, & OLED-A
The next figure compares the area increase of iPhone 4S and Galaxy models. The iPhone 5 due out later this year is expected to have a 4.3” display, so that the advantage of the Galaxy phones vs. the iPhone will be ameliorated.
Figure 3 Display Area by Panel Size of Smartphone
SMD intends on maintaining its AMOLED leadership position by introducing flexible AMOLED displays in Q4’2012. To perfect that approach, SMD established a JV with Ube Kosan, a leading hardened polyimide producer in Japan by adopting their equipment and process for a flexible new backplane. Ube Kosan supplies hardened polyimide, which will replace the glass substrate. The hardened polyimide material requires curing equipment, which will be provided by Tera Semicon, a Korean equipment maker. Also the flexible display production process requires additional process steps –for lamination and delamination of the polyimide to the glass carrier plate for the TFT process, which protects the plastic substrate from the high temperature deposition process. After lamination, a delamination process is used prior to encapsulation; AP System, a Korean leading AMOLED equipment producer, supplies the Laser Lift Off (LLO) tool. Another noticeable modification that SMD made for its flexible display process is applying the so called “Hybrid” patterning process instead of FMM technology for deposition and patterning. The Hybrid process uses Laser Induced Thermal Imaging (LITI) to pattern green and red and thermal deposition (no patterning) for blue for A2-phase 3 line (A2-P3). By applying this heat and laser combination process and eliminating the FMM, SMD can achieve 300+ ppi with A2-p3 line for flexible displays. Also, SMD converted from glass to thin-film encapsulation. SMD will implement the thin-film process for panels <10” beginning with line A2-p3. This thin-film encapsulation process requires applying 3 or 4 dyads containing organic and inorganic materials. Figure 4 illustrates the multilayer encapsulation process and Figure 5 shows the deposition process. Using a flexible substrate and applying thin-film in a conformal manner should increase the moisture protection, provide for a more robust display (no glass) and reduce the thickness to less than .5mm. SMD had co-worked with Vitex Systems and in 2011 SMD acquired the company. SMD has tried ALD technology but apparently, it is not ready for mass production. Vitex System is known as the pioneer of encapsulation with excellent barrier technology and core possess IP related to encapsulation process. Applying the barrier technology enables production of a robust display that can endure external shock (i.e. hits from a hammer). The downside of the Vitex approach has been its thick layers and the resulting slow deposition process as well as the cost of the material. SMD will no doubt charge a premium for the flexible display.
Figure 4 Multilayer Encapsulation
Source: Vitex System, OLED-A
Figure 5 Multilayer Deposition
Source: Vitex System, OLED-A
SNU was one of Vitex System’s licensees for encapsulation and has delivered encapsulation equipment to Taiwan and Chinese display producers in 2009 and 2010. SNU is also SMD’s thin-film encapsulation equipment tool maker, while SFA and Wonik IPS have developed encapsulation equipment and are trying to get qualified by SMD. The ULVAC sputter equipment used to deposit the aluminum oxide inorganic layer has been experiencing low yields so that SMD may switch from ULVAC to a domestic sputter equipment company. SMD plans to increase its current yield rate ~70%, to a higher level by May 2012 when the company starts mass production. SMD’s flexible display brand is called YOUM and the company has recently trademarked YOUM for flexible displays in the U.S. Figure 6 compares LCD with OLEDs and YOUM.
Figure 6 Comparison of LCD VS. OLED VS. YOUM (Flexible Display by SMD)
Source: SMD, OLED-A
Not much information is available on flexible displays; however, some interesting videos are available on YouTube. One clip from Vitex System, before the company was acquired by SMD, demonstrates a hammer stress test and an anonymous clip titled Samsung Flexible display are listed. Both clips show the flexible display under going a hammer stress test (http://www.youtube.com/watch?v=a0iTg1pufdE and http://www.youtube.com/watch?v=-k6r2HQY9Ws). The videos give some idea why SMD’s first generation of flexible display as an unbreakable or a durable, second generation as a bendable, third as a flexible and forth as a disposable. According to Displaybank, a flat panel display market research company, the flexible display market size will be USD 2.4 Billion in 2015 and USD 30 Billion in 2020.