Display Supply and Demand Outlook - Markit Supply and Demand Outlook 2016 Korea Display ... Real GDP growth rate forecast 3.1 2.6 2.5 2.7 2.7 ... Samsung Display SD Suzhou 8.5 LCD

© 2016 IHS Markit. All Rights Reserved.© 2016 IHS Markit. All Rights Reserved.

SURF THE NEW WAVEDisplay Supply and Demand Outlook

2016 Korea Display Conference

박진한, JinHan Ricky Park

Director, IHS Markit Technology

© 2016 IHS Markit. All Rights Reserved.

Changes on demand area forecastReview 2016-FPD demand area

2

Q1'16 Q2'16 Q3'16 Q4'16

As of Q4'15 42 45 48 48

As of Q1'16 41 45 48 49

As of Q2'16 41 45 50 49

As of Q3'16 41 46 50 49

183.0183.5

184.4

185.4

177.0

As o

f Q4’1

5

As o

f Q1’1

6

As o

f Q2’1

6

As o

f Q3’1

6

2015(A) 2016(E)

YoY 4.7%

YoY 3.4%

FPD

dem

and a

rea(M

illion s

quare

mete

r)

Share of H1’16

47.5% �� 46.9%

FPD

dem

and a

rea(M

illion s

quare

mete

r)

Source: IHS Markit, Display long-term demand forecast tracker


Changes on capacity forecastReview 2016-TFT area capacity

3

Q1'16 Q2'16 Q3'16 Q4'16

As of Q4'15 65 66 67 68

As of Q3'16 65 67 67 67

252.6

2015(A) 2016(E)

267.0 266.0

As o

f Q4’1

5

As o

f Q3’1

6

TFT a

rea c

apacity

(Millio

n s

quare

mete

r)

YoY 5.3%

YoY 5.9%

Source: IHS Markit, Display supply demand and equipment tracker

TFT a

rea c

apacity

(Millio

n s

quare

mete

r)


4


Main reason for panel shortage

5

Unexpected capacity changes

•Earthquake effect from Tainan, Kumamoto and Taoyuan.

•Lower production yield for MMG process: 43/21.5-inch, 65/32-inch, 45/23.6-inch from G8

•Lower glass efficiency for larger sized products: 65(84%@G6, 64%@G8), 75(75%@G7), 85(72%@G8)

Production issues

•Converting electrode materials to Cu: SDC, AUO, INX, CSOT and BOE

•Adopting 0.4T glass for cost down and curved: SDC and AUO

•BCS for cost down and better aperture ratio: SDC

Remodeling

•Reduce IT capacity and enforcing TV and AMOLED products

•Shut down TFT-LCD FAB

•Switch to AMOLED equipment

Restructuring


FPD Demand Forecast

6


Expectation is just recovered

7

Real GDP growth rate forecast

3.12.6 2.5 2.7 2.7

2.42.8

3.1

'11 '12 '13 '14 '15 '16 '17 '18

6.3 6.3 6.2 6.3

China

‘2017 GDP’ Updated in

1.30.6 0.2

0.8

Russia

7.77.6

7.4 7.4

India

1.2

-0.7 -0.8

0.6

Brazil

Real GDP growth (worldwide)

1.8 1.81.1 1.3

Eurozone

2.9 2.82.4 2.2

US

Source: IHS Markit, IHS Global Economic Forecast


Silent consumer market in the long-term

8

Consumer electronics shipment forecast

2015 2016 2017 2018 2019 2020

2.6%

-1.4%

2.4%-1.9%

CAGR(‘15-20)

Source: IHS Markit


Area demand is steadily growing by key factors

• Demand for larger size for TV, Monitor and Tablet

• Demand for Higher resolution: FHD for IT, UHD & 8K for TV

• Demand for advanced technology: AMOLED, LTPS and Oxide

• Demand for fancy design: Flexible, Ultra slim, narrow bezel and detachable design

• Demand from niche market: Curved TV and monitor

9

FPD demand area forecast

0.0

50.0

100.0

150.0

200.0

250.0

2014 2015 2016 2017 2018 2019 2020

Million s

quare

mete

r

Others

Smart Watch

Public Display

OLED TV

Mobile Phone

Mobile PC

LCD TV

Desktop Monitor

Automobile Monitor

CAGR 11%

CAGR 15%

CAGR 78%

CAGR 6%

CAGR-1%

CAGR 5%

CAGR 1%

5.0%



2017, expecting to be better

10

FPD demand forecast

Million unit 2015 2016 2017

LCD TV 274 264 266

Desktop Monitor 140 138 135

Notebook PC 180 164 164

Tablet 272 229 214

Smartphone 1,548 1,606 1,713

2,413 2,402 2,492

2016 2017

-3% 1%

-1% -2%

-8% 0%

-16% -7%

4% 7%

0% 4%

Million m2 2015 2016 2017

LCD TV 124 132 141

Desktop Monitor 19 19 20

Notebook PC 10 9 9

Tablet 6 5 5

Smartphone 10 11 13

169 177 187

2016 2017

6% 7%

3% 2%

-10% 0%

-11% 3%

9% 10%

4% 6%

Panel demand unit

Panel demand area

YoY

YoY



Why not? Larger size TV

11

Potential market for super large size TV

Living room

Screen

size(inch)

Distance

(meter)

55 2.3

65 2.7

75 3.1

85 3.5

95 3.9

100 4.1

Viewing distance

Scre

en d

iagonal s

ize

Source: Viewing distance(Society of motion picture & television engineers)Average size of dwelling(United States Census, National Bureau of Statistics of China, Eurostat)

TV ASP(IHS, TV Set market tracker)

Dwelling

size(m2)

USA 139

EU 96

Gemany 94

France 94

China 108

China-Urban 94

China-Rural 144 0

1,000

2,000

3,000

4,000

55"

65"

75"

TV SET ASP(US$)


Why not? Larger size TV

12

Over 60-inch TV share

4% 4%5% 6%

7% 7%8%

9%10%

10%9% 9%

12%13%

15%16%

17%18%

20%21%

14% 13%

19% 19%

21%

24%

26%27%

29%30%

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Unit share

Area share

Revenue share



Maximize the efficiency & differentiation

13

TV Size competition by panel suppliers

2014 2015 2016 2017 2018 2019 2020

Gen 8: INX + Sharp Gen 10+ INX, HKC, CEC Gen 8.6

Gen 7: AUO, LGD Gen 8: BOE,CSOT

+ LGD Gen 8+ SDC Gen 8 + BOE Gen 10.5 + CSOT Gen 10.5

Gen 7: SDC, INX + Sharp Gen 10

45-inch

43-inch

39.5/40-inch

42-inch

50-inch

49-inch

46~48-inch

Current suppliers Additional suppliers

Gen 7: AUO, INX,LGD

+ INX, HKC, CEC Gen 8.6

Gen 8: BOE,CSOT, SDCGen 7: LGD, AUO

+ AUO Gen 8+ BOE Gen 10.5 + CSOT Gen 10.5

Share by size in 46-50 inch category

Share by size in 40-45 inch category



FPD Supply and Demand Outlook

14


Aggressive investment for Larger FAB & AMOLED

15

FAB investment plan in China

Manufacturer Factory Gen Application Phase Probability Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

AUO FVO Kunshan L6K LTPS 6 LCD 1 100% 5 10 13 13 13 13 13 13 13

2 90% 7 10 12 12 12 12

BOE BOE B7 Chengdu LTPS 6 AMOLED 1 90% 2 6 8 12 15

2 60% 5 8

3 30% 5

BOE Chongqing B8 8.5 LCD 4 100% 15 25 35 35 35 35 35 35 35 35 35 35

BOE Fuqing B10 8.5 LCD 1 90% 25 60 60 60 60 60 60

2 90% 20 40 60 60

BOE Hefei B9 10.5 LCD 1 90% 15 25 30 30

2 90% 5 20 30

BOE Ordos B6 LTPS 5.5 LCD+AMOLED 2 90% 5 10 20 30 30 30 30 30 30

CEC Panda PND Chengdu 8.6 LCD 1 70% 30 40 50

CEC Irico Irico Xianyang 8.6 LCD 1 75% 30 50 55

China Star CSOT Shenzhen T2 8.5 LCD+AMOLED 2 100% 22 52 60 60 60 60 60 60 60 60 60

CSOT Wuhan LTPS T3 6 LCD 1 100% 8 12 15 15 15 15 15 15 15 15

LCD+AMOLED 2 100% 5 10 15 15 15 15 15 15 15

CPT Vibrant Display Tech Fuzhou 6 LCD+AMOLED 1 90% 5 10 15 25 30

HKC HKC Chongqing 8.6 LCD 1 100% 35 65 70 70 70 70 70

LG Display LGD Guangzhou 2 8.5 LCD 1 100% 15 47 50 50 50 50 50 50 50 50 50

2 90% 25 40 40 40 45 50 50

Samsung Display SD Suzhou 8.5 LCD 3 100% 15 45 60 60 60 60 60 60 60 60 60 60

Tianma TNM Xiamen 2 LTPS 6 LCD 1 100% 7 10 15 15 15 15 15 15 15 15

2 100% 5 10 15 15 15 15 15 15 15

TNM Zuoling Wuhan LTPS 6 AMOLED 1 90% 2 6 10 15

2 74% 5

Truly TLY Huizhou A 4 LCD+EWD 1 100% 5 10 20 40 50 50 50 50 50 50 50

TLY Huizhou B SEC L4 LTPS 4 AMOLED 1 100% 5 10 15 15 15 20 25 30 30

TLY Shanwei 2 SEC L5 5 LCD 1 90% 10 20 40 50

Visionox GoVSX Kunshan LTPS 5.5 AMOLED 1 100% 2 4 5 5 5 5 7 7 7 7

2 80% 4 8 8 8 8

Royole Ryl Shenzhen 1 5.5 AMOLED 1 78% 3 6

Mainly for large displayMainly for small medium display

Source: IHS Markit, Display supply demand & equipment tracker


Manufacturer Factory Gen Application Phase Probability Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

AUO AUO Taichung L8B 8.5 LCD 3 100% 17 24 24 24 24 25 25 26 27 27 27

Foxconn Foxconn Kaohsiung LTPS 6 LCD+AMOLED 1 100% 10 20 24 24 24 24 24 24 24

Innolux Corp. CMO Kaohsiung Fab8_b 8.6 LCD 1 100% 15 30 40 40 40 40 40 40

JDI JDI Hakusan D3 LTPS 6 LCD 1 100% 20 25 25 25 25 25 25 25

LG Display LGP Kumi AP3 LTPS (P6) 6 AMOLED 4 100% 3 6 8 8 8 8 8 8

LCD+AMOLED 3 100% 3 8 8 8 8 8 8 8 8 8 8

LGD Paju P9-E6 G6 6 AMOLED 1 90% 5 10 15 15 15 15

2 74% 10 15 15 15

3 40% 10

Samsung Display SD A3 6 AMOLED 1 100% 15 15 15 15 15 15 15 15 15 15 15 15

2 100% 2 12 15 15 15 15 15 15 15 15

3 100% 10 15 15 15 15 15 15 15

4 100% 5 15 15 15 15 15 15 15

5 90% 10 15 15 15 15 15 15

6 90% 3 12 15 15 15 15 15

7 90% 7 12 15 15 15 15

8 90% 10 15 15 15 15

SD A4 (L7-1) 6 AMOLED 1 70% 5 10 15 15 15

2 60% 10 15 15 15

3 50% 10 15 15

4 40% 10 15

5 30% 10

SMD A2 5.5 AMOLED 6 100% 10 20 20 20 20 20 20 20 20 20

SD A2-E (V-1 Pilot) 5.5 AMOLED 1 90% 5 15 15 15 15 15 15

2 30% 5 15 15

Sharp SHP Kameyama 2 Oxide 8 LCD 3 90% 5 10 10 10 20 20 20 20 20

Aggressive investment for AMOLED & restructuring

16

FAB investment plan in Korea, Taiwan and Japan


Mainly for large displayMainly for small medium display


Dispose and restructure FABs

17

TFT FAB shutdown forecast

Manufacturer Factory Gen Application End Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17

AUO QDI Linkou L3D 3.25 LCD Jul-16 45 45

E Ink PVI Hsinchu Fab1 2 LCD+EPD Sep-16 75 75 48

Innolux Corp. TPO Jhunan Fab1 T3 3.25 LCD+AMOLED Jul-17 255 255 255 255 255 255

JDI HIT Mobara V3 #1 4 LCD Jan-17 174 174 174 174

HIT Mobara V3 LTPS 4 LCD Apr-16 75

STL Higashiura #1 3.25 LCD+AMOLED Apr-16 45

LaiBao PCK Kobe #2 2.5 LCD Jan-17 90 90 90 90

LG Display LGP Kumi P2 3.25 LCD Apr-17 120 120 120 120 120

LGP Kumi P3 3.5 LCD Apr-17 156 156 156 120 120

LGP Kumi P6 6 LCD Oct-17 165 165 165 165 165 165 90

Panasonic LCD IPSA Himeji 1 8 LCD Sep-16 84 75 60

Samsung Display SEC Chonan L6 5 LCD Apr-17 120 105 105 105 75

SEC Tangjong L7-1 7 LCD Dec-16 450 450 450 333

SMD V1 Pilot 8 AMOLED Aug-16 30 30 15

Sharp SHP Tenri CGS-A 3.25 LCD Oct-16 45 45 30

-4.8 -15.3 million m2

2% 6%

Decreased area capacity by above FABs

Decreased area capacity/Total area capacity



2013 2014 2015 2016 2017 2018 2019

LCD, AMOLED, AMEPD Demand Y/Y% 6% 14% 5% 5% 7% 5% 4%

TFT Capacity for AM Applications Y/Y% 5% 5% 7% 5% 2% 6% 6%

Expect to be tightness

18

Capacity area growth vs. demand area growth

Oversupply

Shortage

Tightness

Oversupply


Notes: Demand includes AMEPD, AMLCD, AMOLED, a-Si, LTPS and oxide panels for both large-area and small/medium applications. Capacity includes all ramped capacity for fabs with ≥30% probability for all applications,, glass sizes and technologies.


Balanced glut ratio for large display

19

Glut, Inventory and FAB utilization forecast

Inventory

FAB Utilization90%

80%

-0.5w

+0.5w

Normal level(4.0w)

piles up decreases decreases rebuild piles up

80% 86% 90% 91% 85-90%

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

Glut ratio

19.9%

12.6%

9.0% 8.2%

12.2%

7.0% 6.4% 7.5%

0.0

10.0

20.0

30.0

40.0

50.0

60.0 Demand Capacity Glut

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

Are

a (m

illion s

quare

mete

r)

Glu

t(%)

Balance (0~10%)

Source: IHS Markit, Display supply demand & equipment trackerDisplay production and inventory tracker


How many TV panel is carried over to next year

20

TV Panel vs. SET shipment comparison

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

0

500

1,000

1,500

2,000

2,500

Q1'12 Q1'13 Q1'14 Q1'15 Q1'16 Q1'17

TV Set Accumulated Shipment

TV Panel Accumulated Shipment

Accumulated Gap.

LCD TV module vs. set shipment comparison and gap forecast

© 2015 IHS

Million Units

Notes: Accumulated shipment for TV and panel from Q1 2004

Source: IHS



How many TV panel is carried over to next year

21

TV Panel vs. SET shipment comparison

2014 2015 2016 2017

LCD TV panel shipment 253 274 264 266

panel for repair and A/S 3 3 3 3

Open Cell/BMS business 3 4 4 4

China Low-Tier and OEM 3 3 3 3

emerging market 0 1 1 1

Others 5 12 10 10

Usage for monitor 6 9 9 9

Usage for public display 8 11 12 12

Actual LCD TV panel shipment 224 232 222 224

LCD TV Set shipment 225 224 221 225

Gap (Panel - SET) -1 8 1 -1

Accumulated Gap 1 9 10 8

224

232

222 224

150

200

250

300

2014 2015 2016 2017

Millio

n u

nit

225 224221

225

Actual panel shipment

SET shipment



Gen10.5 FABs to have an impact on TV market

22

BOE & CSOT’s plan for Gen10.5

Panel Size Economical

Cut Glass

Efficiency

43” 18 96%

49” 12 82%

65” 8 96%

75” 6 96%

61” (21:9) 10 93%

70” (21:9) 8 91%

Gen10.5 (2940x3370)

Panel Size Economical

Cut Glass

Efficiency

43”+21.5” 8 + 8 93%

49” 8 96%

65”+32” 3 + 6 94%

75”+49” 2 + 2 80%

Gen8.5 (2940x3370)

2

8

11

2

17

53

75"

65"

43" (Panel demand)(Production volume at Gen10.5)

21%% (share of production at Gen10.5)

45%

97%

vs.

Market share of production at Gen10.5 (million unit)



Chaiwan(China + Taiwan) union

23

LeEco + VIZIO

Bran

dT

V O

EM

Sh

are

Main

Market

China No. 7 in 2015

(behind China top-6, ahead of Samsung)Want to penetrate N. America, AP (India)

N. America No. 2 in 2015(behind Samsung)

Struggling to penetrate overseas market

(65%) (15%)(5%)

China others (15%, 毅昌毅昌毅昌毅昌,天天天天樂樂樂樂, 歌爾歌爾歌爾歌爾)

Cashinjection

Invest 20%

(47%) (29%)(15%)

(9%)

Invest 8% Invest 8%

Pan

el

INX Sharp CEC HKCCSOT

Invest 24%

Technology support

Ch

an

nel

Investment

Technology


What is next wave

24

FPD market revenue forecast

19981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020

CRT TV

Monitor

Mobile PC

LCD TV

Mobile phone

FPD for IT application

FPD for TV

FPD for Mobile

Next ?


Surf the new wave

25

초대형 TV 시장 선점

AMOLED 시장 확대

영원한 적군도 아군도 없다


26

READY TO SURF!!!

Documents

Display Supply and Demand Outlook - Markit Supply and Demand Outlook 2016 Korea Display ... Real GDP growth rate forecast 3.1 2.6 2.5 2.7 2.7 ... Samsung Display SD Suzhou 8.5 LCD