Supply Chain Reacting to Smart Devices
March 18, 2013, NPD Flat-Panel Display Conference, San Jose, CA—Paul Semenza from NPD DisplaySearch described how the supply chain is reacting to the rise of smart devices. The apparent conflict between big and cheap versus increasingly high-tech means that supply chain must evolve to meet both requirements.
Smart devices are defined as connected, interactive, and intelligent, with all endpoints and all in one, monitors, etc. potentially within this category. The technologies include WiFi, various operating systems, and the arena is rife with competition between various technology camps. These Internet team battles are overflowing into other areas causing growth to slow down in TVs, monitors, and PCs.
At the same time, tablets are growing into multiple roles, as replacements for TVs, notebooks, and other media consumption devices. The tablets have smaller displays than previous devices, so their emergence affects profitability in the supply chain. Phones drive unit demand, but have little effect on area demand. TV is still the driver for area.
Tablets will pass monitors in area by ’18, and the 7 inch and 10 inch tablets will continue to see high growth. The display technologies are moving to high resolution with Apple first with their retina display and others following close behind. The technologies are switching from silicon to oxide TFT, although low-temperature polysilicon is still favored per tablet displays. There is a possibility that we will see tablets with AMOLED displays next year. The manufacturers will transfer AMOLED production from phones to tablets.
The largest segment for displays will be smart phones and we will see better performance and lower prices for these devices. There might be a sub $100 smart phone in China. Displays on mobile devices will increase resolution and most displays will use low-temperature polysilicon. The high-resolution displays will move to AMOLED.
The revenue for mobile will continue to grow and exceeds the total of all other segments. This will put price pressure on the other displays. The value in displays comes from the functionality and content, especially in phones. Their color performance and integrated functions have led to changes in the user interface and added value to the displays.
The flat-panel display makers are still struggling with limited profits. There are no new apps to drive increases in demand and most of these people are just in Gen. 5 to 8 fabs. The manufacturers are focusing on utilization rate, raising it from less than 70 percent in ’11 to 86 percent in the last quarter of ’12. There still an oversupply of displays, so companies are changing to new technologies as a way to reduce capacity for the short-term.
China is distorting the picture with lots of new capacity. They are driving to change sizes to get better use of their fabs, and re-purposing production from TVs to tablets. The changing their technologies and also changing what they are supplying. Over time supply and demand will come into balance.
The industry is also seeing changes in devices and technologies. LG introduced a $12,000 55-inch OLED TV. LCDs are already capable of 4K resolution in sizes from 50 to 110 inches, but content is not available yet. Expect a very fast drop in prices for these technologies. OLED will achieve 4K resolution soon, but at unknown price levels. The OLED displays are built in two different technologies.
The first deposits colored emitters over a large area. This is a new manufacturing technology and most people are using oxide transistors for their high-performance. The alternative is to use white OLED plus a filter, a process very much like that of the current LCD. OLED TV will be limited for the next two generations due to image quality and resolution issues.
The unique value of OLED is the ability to be on a non-planar or flexible substrate. This capability opens new applications, but there are questions about and user benefits. AMOLED is approaching the resolution of LCD and the flexibility is an added value that allows new form factors in displays.
Touch and tablet functions are moving to change the PC. Windows 8 is uncertain product due to the increased costs and significant changes in use modes. Some hybrid form factors are coming out, but are still evolving. There is a big shakeup coming. The changing economics will drive form factors and intermediate category “phablets” with phone functions and displays up to 6 inches are emerging that may be too big to be useful. Moving from the other direction, 8 inch and smaller tablets might be usable as phone. A trade-off is the amount of information you can display and ergonomics.
As a result, there is potential for extension devices like smart watches. The challenge will be convincing consumers that a partial tweet is useful. The alternatives might be something like Google glass.
Likely winners in these markets are smart phones, tablets, and other high-performance technologies. Losers are desktop PCs, laptop or notebook computers, and televisions under 32 inches. Still to be determined are smart TVs, touch notebooks, ultra-books, and AMOLED. Disruptors include phablets, hybrid PCs, and flexible displays
