The ban on display materials is imminent, can domestic substitution get rid of import dependence?

DigiTimes recently reported that the U.S. government is reviewing regulatory measures that restrict the sale of display materials and production equipment to mainland Chinese companies. At present, although Korean companies still occupy a major market share in OLED panel production capacity, the market share of Chinese companies is rapidly increasing, presenting a trend of “late development, first arrival”. According to a report by the Korea Display Industry Association, Chinese panel makers’ share of the global smartphone AMOLED panel market has jumped from 1.1% in 2016 to 13.2% in 2020.

With the gradual advancement of OLED technology development, cost reduction and production capacity construction, it is expected that the penetration rate of OLED in high-end smartphones, wearable devices, tablets/notebooks and other fields will further increase in the future. Recently, analyst Ross Young predicted that Apple will launch a 13-inch Macbook Air and iPad Pro with OLED displays in 2024. Therefore, it is imminent to gradually get rid of import dependence and cultivate related enterprises in the local OLED industry chain.

In the first quarter of this year, Chinese panel companies had a market share of 22.6% in small and medium-sized OLED panels. According to Omdia’s prediction, by 2026, my country’s OLED panel production capacity is expected to account for 49.04% of the global production capacity by 2026, reaching a level of parity with Korean OLED panel manufacturers.

Although China’s display industry has surpassed that of South Korea, companies in Europe, America, Japan and South Korea are still in the leading position in OLED segments. In the field of small and medium-sized OLEDs, Samsung took the lead in realizing the industrialization of OLED products by taking advantage of its entire industry chain. In order to surpass Korean companies, local manufacturers BOE, China Star Optoelectronics, Tianma Group, Everdisplay Optoelectronics, Visionox and other panel manufacturers have built OLED production lines.

According to the research report of Guoyuan Securities, with the increase in production capacity of OLED panel manufacturers and the gradual realization of full localization of supporting materials, upstream enterprises in the industrial chain will have a huge market space. The optical structure, liquid crystal layer, and backlight module are eliminated from the raw materials of OLED panels, and organic light-emitting materials are added. Therefore, the cost structure of OLED panels is also very different. Comprehensively compare the cost structure, equipment, organic materials and drivers in the upstream industry chain of OLED panels. The chip field has more flexibility.

organic material

According to the production process of organic light-emitting materials, it can be divided into intermediates, front-end materials and back-end materials. Intermediates are raw materials or chemical products required in the process of synthesizing OLED organic light-emitting materials. Some intermediates are chemically synthesized into front-end materials in one or more steps, and then subjected to multiple sublimation and purification to obtain terminal materials. It can be directly vapor-deposited on the substrate to manufacture OLED panels.

Terminal materials can be directly used in the fields of OLED display and OLED lighting, and its purity is required to be above 6-8N (99.9999%-99.999999%), which plays a decisive role in the display effect and life of the panel, and is the material with the most difficult production process among the three .

Previously, domestic manufacturers focused more on the production and manufacturing of intermediates and front-end materials with low technical thresholds. They were upstream suppliers of overseas terminal material manufacturers. , DuPont, Merck, Deshan Group, etc.

Due to the early start of foreign OLED organic material companies, most of the patents are controlled by European, American, Japanese and Korean companies and form the patent protection of corresponding materials, which restricts other manufacturers from entering the supply chain system of panel manufacturers, and the localization of OLED terminal materials is relatively low. With the rapid development of domestic panel production lines driving the upstream material industry, a number of domestic manufacturers have broken through overseas patent technology barriers, achieved mass production of intermediate and terminal materials, and successfully entered the corresponding supply chain.

Domestic OLED terminal material enterprises are scarce. According to the classification of A-share listed companies according to the OLED panel production process, 11 companies are in the module process, 5 are in the array process, and only Lite Optoelectronics and Oled are in the organic evaporation process (involving organic light-emitting materials). .

According to the Nano Market report, organic light-emitting materials account for about 12% of the cost of OLED panels, and it is also one of the areas with the highest technical barriers in the industry chain. Similar to the competition pattern of equipment, the global organic light-emitting materials are used by the United States, Japan, South Korea, Germany, etc. and other state monopoly.

“If any company wants to commercialize blue phosphorescent OLEDs, they cannot avoid UDC patents,” said Mike Hack, vice president of UDC, an organic light-emitting diode (OLED) materials company in the United States. Based on its large patent portfolio, UDC exclusively produces dopants , which is the key to red and green OLEDs. Vice President Mike Hack said that UDC will mainly produce dopants for blue phosphorescent OLEDs in the future. Even if another company mass-produces blue phosphorescent OLEDs manufactured with its own technology, it means that UDC’s patents must be used.

Device side

The vacuum evaporation machine is to OLED preparation, which is equivalent to the lithography machine to chip manufacturing. It can accurately, uniformly and controllably vaporize the organic light-emitting materials required by the OLED panel on the substrate, and the same is true for metal electrodes. Since panel manufacturing is very susceptible to the influence of water and oxygen, this process should be carried out in a vacuum environment. Through current heating, electron beam bombardment heating, etc., the luminescent material and metal electrodes collide with the surface of the substrate and condense to form a thin film. , This process is called vacuum evaporation.

The quality of the vacuum evaporation machine and the advanced level of the process directly affect the display effect of the OLED panel. From the perspective of capital investment in OLED production lines, according to IHS statistics, manufacturing equipment is the main capital expenditure in the investment and construction of OLED production lines, and the investment in rigid and flexible OLED equipment accounts for 72% and 82% respectively. OLED equipment is a typical technology-intensive industry with high technical barriers, and the global competition pattern presents an oligopoly situation. Japan’s Canon Tokki’s evaporation machines account for up to 95% of the market share.

Before BOE deployed OLED screens, mass production and shipments were delayed. The fundamental reason was that Canon Tokki’s vapor deposition machines could not be purchased, so they could only buy equipment from other manufacturers. According to public data, the domestic market demand for OLED screens has increased from 290 million in 2019 to 450 million in 2022. At present, Hefei Xinyihua, Zhongshan Kaixuan, and Ryder Equipment have made certain technological breakthroughs in the domestic market in terms of evaporation machines, which have played a leading role in supporting the healthy competition and development of domestic OLED vacuum evaporation machines in the future.

driver chip

According to the statistics of IFinD, mobile phones are the largest downstream application terminal of OLED in 2020, accounting for 73%, followed by OLED TV series, accounting for 19%, while computers and smart watches account for a lower proportion. It is expected that with the improvement of industry recognition in the future, the proportion of computers and smart watches will gradually increase. This trend is expected to increase the demand for OLED driver chips.

Similar to the pattern of panel materials, OLED driver chips are currently dominated by Korean manufacturers. Samsung, MagnaChip, and Silicon Works have dominated for a long time. These companies have monopolized 90% of the world’s OLEDs. Driver chip market share.

At present, the market position of panel manufacturers in mainland China in the OLED panel industry is rapidly improving. According to CINNOResearch statistics, in the first half of 2021, the global market share of local domestic driver chip design manufacturers has increased to about 15%, which is a significant increase from 2020. It can be seen that the market share of OLED driver chips has a large domestic substitution space.

In recent years, domestic chip companies such as Zhongying Electronics (subsidiary Xinying), Gekewei, Chipone North, Xinxiang Microelectronics, Solomon Systech, Yunyinggu, GDIS, Shenghewei, and Yisiwei have all In the layout of the OLED driver chip track, promote the “domestic substitution” of OLED driver chips.

epilogue

Previously, under the influence of the US “Entity List”, Huawei, a well-known domestic terminal manufacturer, gradually transferred its supply chain to China, and began to use displays produced by manufacturers such as BOE and Visionox, which further promoted the domestic OLED industry chain. cycle.

China has the world’s largest panel consumption market. Therefore, in order not to continue to be “stuck”, it is imperative to localize China’s OLED industry. However, in view of the gap between the current domestic and international advanced levels, OLED upstream and downstream companies need to make simultaneous efforts to continuously introduce products that replace imported products, so as to further free the domestic panel industry from technology dependence.

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