© 2016 IHS Markit. All Rights Reserved. © 2016 IHS Markit. All Rights Reserved.
China smartphone market dynamic
and local panel makers strategy The supply chain dynamic and intensive investment
Nov.3th , 2016
Terry Yu, Senior Analyst
IHS Markit | Technology
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2
Ou
tline
s
Brand transfer wave and supply chain adjustment
in China domestic market
Major panel makers strategy outlook
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3
Smartphone market is getting mature and losing
growth Impacted by the weak iPhone demand, smartphone got the negative Y/Y growth in Q1’16
Global smartphone market shipment result
287 299
328
378
337 340 356
403
335 344
0
50
100
150
200
250
300
350
400
450
Q1‘14 Q3‘14 Q1‘15 Q3‘15 Q1‘16
-0.6%1.2%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
30% Y/Y
0% Y/Y
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4
The driving force behind brands competition The multi-wave helped to form current fast changing competitive landscape
Global smartphone shipment share by brand
**Subsidy policy terminal
**Boosted on-line demand
**Boosted off-line demand
0%
10%
20%
30%
40%
50%
Q1‘13 Q3‘13 Q1‘14 Q3‘14 Q1‘15 Q3‘15 Q1‘16
I II III
OPPO/vivo
APPL/Samsung
Xiaomi
Huawei
Lenovo/ZTE/CoolPad
**Telecom operator subsidy
**China domestic market
**Mature hardware performance
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5
The changing growth in China domestic market Benefitted from the strong off-line channels and replacement demand, OPPO and
vivo performed extremely good in 1H’16.
China smartphone shipment share by brands
5
10
15
20
Q1'15 Q2'15 Q3'15 Q4'15 Q1‘16 Q2’16
Xiaomi
Huawei
Apple
OPPO
vivo
Samsung
5 million
10 million
15 million
20 million
OPPO
Huawei
vivoXiaomi
Apple
Samsung
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6
Local brands’ strong positioning among 1,000-
4,000CNY range
Brand OPPO Samsung Samsung
Model A59 GALAXY On7 GALAXY On5
Launch June'16 Sep'16 Oct'16
Price 1,799 CNY($266) 1,799 CNY($266) 1,299 CNY($192)
Display Technology aSi LCD LTPS LCD aSi LCD
Size 5.5'' 5.5'' 5''
Resolution 720HD FHD 720HD
AP Core Octa Octa Octa
Model MT6750 Snapdragon 625 Snapdragon 617
RAM 3G 3G 3G
ROM 32G 32G 32G
Rare camera 13M 13M 13M
Front camera 8M 8M 8M
Battery 3075mAh 3300mAh 2600mAh
Size mm 154.5x76x7.38 151.7x74.9x8.0 142.8x69.5x8.1
Weight mg 160 167 143
GALAXY On7
GALAXY On5
OPPO A59
@1,299
@1,799
@1,799
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7
Does the supply chain ready for the booming
surge of OPPO/vivo? The tight Samsung AMOLED supply and JDI’s back to OPPO/vivo value chain
1H’15@JDI
OPPO vs
LGE/Huawei
1H’16@SDC
OPPO vs Samsung
JDI 5.5’’FHD in Q3
& 6’’ FHD in Q4
SDC AMOLED clients
SEC
85%80%
89%79% 75%
69%74% 73%
5%8%
7%7% 11%
5%3%
6%7% 6%
Q3‘14 Q4‘14 Q1‘15 Q2‘15 Q3‘15 Q4‘15 Q1‘16 Q2‘1637M 41M 53M 52M 72M 78M 87M 98M SDC AMOLED shipment
OPPO
vivo
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8
Samsung Note 7 recall issue cannot help China
AMOLED supply Besides the direct cash loss, Samsung Display A3 fab loading rate will be another
challenge.
However, it’s not helpful to improve current rigid AMOLED supply for Chinese brands.
Aug.2
Note 7
debut
2.5M global recall,
except China
Sep.2 Sep.14
1.9K recall in
China
Sep.17~
New battery
version delivery
Oct.10~11
Stop sales and
global recall
Samsung Note 7 loss
Direct cash loss A3 loading rate
Less set sales loss
Recall cost
Repair cost
Delivery cost
Inventory destroy cost 8 million gap?
(estimated)
External demand major from China
Internal demand like S7 edge in 2016
Delay new 15K capacity ramp up
√
√
X
S8 series demand in early 2017 √
Legal cost
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9
Huawei still keeps eyes on the AMOLED supply
chain The coming AMOLED models in 2H’16 and the strategy cooperation with JDI
? ?
Long Island
5.5’’ WQHD
Curved display
Nice
5’’ 720HD
Rigid Huawei procurement share by display technology
P9 plus
5.5’’ FHD
Rigid
Honor Note8
6.6’’ WQHD
Rigid
75% 71%77% 76%
69% 65%
47%
61%
45%
34%
25% 29%23% 24%
31% 35%
45%
31%
46%59%
7% 8% 9% 7%
Q1’14 Q3’14 Q1’15 Q3’15 Q1’16
aSi LCD
LTPS LCD
AMOLED
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10
Xiaomi debuts AMOLED models without
Samsung Display support
Redmi Pro
Launch: July 27th
Price:
1,499 CNY @ July
1,099 CNY @ October
Display:
5.5’’ FHD AMOLED
Ever Display,
BOE(sample)
Others:
AP: MTK Helio X20
RAM/ROM: 3G+32G
Camera: 13M+5M
Battery: 4050mAh
Xiaomi Note 2
Launch: October 25th
Price:
2,799 CNY @October
Display:
5.7’’ FHD dual curved
AMOLED
LG Display
Others:
AP: Snapdragon 821
RAM/ROM: 4G+64G
Camera: 23M+8M
Battery: 4070
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11
The major driving force of the tight smartphone
display supply
Smartphone display shipment by technology
After years of easing supply, smartphone supply chain turns to be tight in 2016, not only
for the display part. aSi LCD shipment dropped the most from Q3’15
0
50
100
150
200
250
Q1‘14 Q3‘14 Q1‘15 Q3‘15 Q1‘16
aSi LCD
LTPS LCD
AMOLED
Oxide LCD
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12
The tight aSi LCD supply in 1H’16 and revised
price trend
Typical prices in China open market
$0
$5
$10
$15
$20
$25
$30
Jan'15 Apr'15 Jul'15 Oct'15 Jan'16 Apr'16 Jul'16
5.5’’ FHD LTPS LCD IPS module
5’’ 720HD aSi LCD IPS module
4’’ WVGA aSi LCD TN module
$5.4@Sep’16$5.05@Jan’15
$9@Sep’16$9@Jul’15
$13.55@Sep’16$13.5@Jan’16
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13
Why does aSi LCD supply get shortage in China
open market?
Spec&
process
Maker
strategyLA
impact
DemandCapacity
* Larger size impact
* Embedded
process impact
* Shut down fabs
* Lower loading rate
* Earthquake
* Limit cell source
* Limit client list
* Develop further applications
* Profit orientation
* Huawei/OPPO/vivo booking
* Improved demand from Jul
* Lower negotiation power
* Higher inventory level
* Speculation
* LA demand and shortage
* Samsung L6&T7-1 close plan
Limit cell : AUO, BOE, LGD, HSD, INNX, Century
Potential Gen 8: BOE Chongqing, CEC-Panda
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14
LTPS LCD and AMOLED will be two major
technologies in future
Smartphone display shipment share by technology
0%
10%
20%
30%
40%
50%
60%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Oxide will have higher unit share when CPT Gen 6 and CEC-
Panda Gen8 Oxide LCD available for smartphone market!
LTPS LCD
AMOLED
aSi LCD
Oxide LCD
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15
Considerable new Gen 5.5/6 LTPS LCD capacity
will be released in 1H’17 The fast increasing LTPS LCD supply may lead to the price down in 1H’17
0
200
400
600
800
1,000
1,200
1,400
1,600
Q1‘16 Q3‘16 Q1‘17 Q3‘17
Maker Fab Gen Max Capa MP ramp
AUO Kunshan L6K 6 25K/M Nov'16
BOE Ordos B6 5.5 30K/M Jan'17
CSOT Wuhan T3 6 30K/M Aug'16
Tianma Xiamen fab 2 6 30K/M Sep'16
JDI Hakusan D3 6 25K/M Oct'16
JDI Mobara IPSA J1 6 8K/M Jan'16
LGD Kumi AP3 (P6) 6 8K/M Apr'16
Foxconn Kaohsiung 6 24K/M Oct'16
Quarterly max area of the new capacity
6.1 8.316
50
86
106
121129
Max 5.5’’ output
Million unit
JDI Hakusan D3 ramp up will delay again
© 2016 IHS Markit. All Rights Reserved.
16
Ou
tline
s
Brand transfer wave and supply chain adjustment
in China domestic market
Major panel makers strategy outlook
© 2016 IHS Markit. All Rights Reserved.
17
The increasing LTPS LCD and AMOLED demand
from major Chinese brands
Major Chinese brands display procurement share by technology
Major brands include Huawei, OPPO, vivo, Xiaomi, Lenovo+Motorola, CoolPad+LeEco, ZTE,
Meizu, TCL and Gionee
80%
60%
40%
20%
0%0%
20%
40%
60%
80%
Q1‘14 Q2‘14 Q3‘14 Q4‘14 Q1‘15 Q2‘15 Q3‘15 Q4‘15 Q1‘16 Q2‘16
aSi LCD
LTPS LCD
AMOLED
Oxide LCD
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18
BOE to carry out revenue orientation strategy
actively in 2016 Besides the increasing module business and LTPS LCD shipment share, BOE also
developed embedded touch solutions aggressively.
BOE mobile phone display shipment share
by business mode
BOE mobile phone display shipment share
by technology
0%
20%
40%
60%
80%
100%
Q1‘15 Q2‘15 Q3‘15 Q4‘15 Q1‘16 Q2‘16
0%
20%
40%
60%
80%
100%
Q1‘15 Q2‘15 Q3‘15 Q4‘15 Q1‘16 Q2‘16
OEM cell
Module
LTPS LCD
aSi LCD
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19
BOE to develop flexible AMOLED aggressively With the B6 phase 2 capacity ready in Ordos, BOE LTPS LCD, including the in-cell total
solutions will boost fast in 1H’17.
The flexible AMOLED investment is aggressive that BOE could reach remarkable
capacity in 2018 but MP challenge will be very difficult.
BOE G4-6 quarterly capacity area: 1,000 m^2/Q
0
200
400
600
800
1,000
1,200
Q1‘15 Q3‘15 Q1‘16 Q3‘16 Q1‘17 Q3‘17 Q1‘18 Q3‘18 Q1‘19 Q3‘19
aSi LCD LTPS LCD Flexible AMOLED
B6 phase 2
B7 phase 1
B7 phase 2&3
B11 phase 1
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20
Tianma to keep aSi LCD fabs loading rate with
priority in 2016 Different from the aSi LCD, Tianma is leading China local LTPS LCD supply chain and
benefit from local LTPS LCD demand.
Tianma mobile phone display shipment
share by business mode
Tianma mobile phone display shipment
share by technology
0%
20%
40%
60%
80%
100%
Q1‘15 Q2‘15 Q3‘15 Q4‘15 Q1‘16 Q2‘16
0%
20%
40%
60%
80%
100%
Q1‘15 Q2‘15 Q3‘15 Q4‘15 Q1‘16 Q2‘16
OEM cell
Module
LTPS LCD
aSi LCD
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21
Tianma to improve the capacity portfolio
gradually With the new Gen 6 LTPS LCD capacity ready, Tianma is supposed to release
considerable LTPS LCD output in 2017. AMOLED capacity will increase fast in 2018.
Tianma G4-6 quarterly capacity area: 1,000 m^2/Q
0
100
200
300
400
500
600
Q1‘15 Q3‘15 Q1‘16 Q3‘16 Q1‘17 Q3‘17 Q1‘18 Q3‘18 Q1‘19 Q3‘19
aSi LCD LTPS LCD Rigid+Flexible AMOLED
Xiamen Gen6
Wuhan Gen 6 +
Shanghai phase 2
Shanghai, ¼ cut
G5.5 evaporation
only
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22
CSOT to join the small/medium game from 2016 CSOT has developed 5.5’’FHD and 5.2’’ FHD LTPS LCDs and now trying to ramp up.
TCL-Alcatel will be the great support to improve MP yield rate.
CSOT also plans flexible AMOLED capacity directly in Wuhan T4 fab to prepare for
future competitions.
CSOT G4-6 quarterly capacity area: 1,000 m^2/Q
0
50
100
150
200
250
300
Q1‘15 Q3‘15 Q1‘16 Q3‘16 Q1‘17 Q3‘17 Q1‘18 Q3‘18 Q1‘19 Q3‘19
LTPS LCD Flexible AMOLED
Wuhan T3
Gen 6 LTPS LCD Wuhan T4
Gen 6 AMOLED
Move ahead?
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23
Truly to get into the role of panel maker Truly doesn’t prepare aSi LCD capacity for smartphone market for long term run to avoid
disadvantage competitions, yet, for the short term run, Truly will develop smartphone
AMOLEDs to improve the ramp up yield rate.
Truly G4-6 quarterly capacity area: 1,000 m^2/Q
0
50
100
150
200
250
300
350
Q1‘15 Q3‘15 Q1‘16 Q3‘16 Q1‘17 Q3‘17 Q1‘18 Q3‘18 Q1‘19 Q3‘19
aSi LCD Rigid+flexible AMOLED
Huizhou Gen4.5 Wuhan T4
Gen 6 AMOLED
ShanweiGen5
Huizhou Gen
4.5 AMOLED
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24
EDO & Visionox to focus on AMOLED only EDO is now actually leading China AMOLED shipment scale and mass production yield
rate, yet, the delayed Gen 6 project lowers their competition.
Visionox is still challenging for 720HD yield rate, but gets support for active Gen 6
AMOLED investment.
EDO & Visionx G4-6 quarterly capacity area: 1,000 m^2/Q
0
50
100
150
200
250
300
350
400
450
500
Q1‘15 Q3‘15 Q1‘16 Q3‘16 Q1‘17 Q3‘17 Q1‘18 Q3‘18 Q1‘19 Q3‘19
Visionox EDO
GVO Gen 5.5
EDO Gen 6
AMOLED
Gu’anGen 6
EDO Gen 4.5
AMOLED
Move ahead?
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25
Terry Yu
Senior Analyst
IHS Markit | Technology | Small/Medium & AMOLED
Thank You