Digitimes Research: China handset vendors to rely on local AMOLED panel production from 2016
Jason Yang, DIGITIMES Research, Taipei [Wednesday 26 February 2014]
On December 17, 2013, China-based touch panel maker Truly Optoelectronics announced that it had entered a joint venture with the Huizhou City Government to invest in a 4.5G AMOLED line that will go into production in the second half of 2015 and have a production capacity of about 15,000 substrates a month. This marks the fifth AMOLED line to be built in China, following on plans by China-based Tianma, BOE, Visionox and EDO to establish plants, as well as developments for future plans by Century and China Star Optoelectronics Technology (CSOT) to invest in AMOLED production in the future. As such developments unfold, from 2016 onwards China's handset vendors are likely to use AMOLED panels from local makers, according to Digitimes Research.
There are three main issues related to China developing AMOLED panels, namely capital, technology and applications. Since China implemented its twelfth 5-year plan, there has been no shortage of funding from both local governments and the central government. The makers have close relations with smartphone vendors such as Huawei Device and Lenovo, which are continuing to produce high-end models in addition to expanding their influence outside of China. The makers also have close connections with touch panel makers yielding better supply chain integration and exports, so solidifying applications will not be a concern. However, achieving high yields for the technology will be the biggest challenge for China-based panel makers.
Taiwan-based panel makers such as AU Optronics (AUO) are struggling to increase yields for AMOLED panels, with limited supplies going to HTC. Innolux meanwhile is supposed to supply to Nokia, but shipments were suspended due to Nokia's limited sales as a result of certain Microsoft's policies. Therefore, it is uncertain how much further Taiwan's AMOLED panel industry will develop in the near future.
Additionally, China makers are heavily reliant on recruiting talent from Taiwan to develop AMOLED panels, which poses challenges for Taiwan's panel industry, as top engineers are continuing to transfer to companies in China. Moreover, Taiwan's panel makers face yield issues and lack enough resources to make sufficient profits from the segment, which are obstacles that expected to remain standing in the way. As AMOLED panel demand in China grows, however, China's smartphone vendors will turn to the local panel industry, making AMOLED makers in China the main suppliers of the technology to smartphone vendors by 2016, added Digitimes Research.