The global OLED panel industry is witnessing a revival fueled by increasing terminal demand, enhanced production capacity, and improved scalabilityThe domestic production capabilities for medium and small-sized OLED displays are advancing significantly, indicating a positive growth trend within the flexible OLED sector in ChinaAs high-generation production lines continue to be established, the domestic supply chain for upstream materials and equipment is accelerating its localization process.

Currently, OLED technology has gained widespread utilization, especially within the smartphone market, where the global production capacity of OLED panels is projected to soar with a double-digit growth rateIt is estimated that by 2024, production capacity may witness an increase of 20%. As high-generation OLED capacity rolls out, it is anticipated that the costs associated with medium-sized OLED screens will decrease, leading to further enhancements and optimizations in OLED technology

This will propel its adoption across various mediums, including tablets, laptops, and in-car displays, widening the scope of applications and expanding market boundaries.

Domestic manufacturers have made remarkable strides in capturing a larger share of the medium and small-sized OLED panel marketAlongside this, efforts to construct high-generation OLED panel production lines are ongoing, with China’s OLED production capacity reaching a substantial 27 square kilometers in 2023. The global OLED display panel market is expected to grow to $54.4 billion in 2024, as the domestic industry chain becomes increasingly refinedThe trend of domestic material and equipment substitution for OLED is gaining traction, bolstering the shift of global OLED capacity towards China.

The increase in penetration rate of OLED technology is evident, with the differentiation between Active Matrix OLED (AMOLED) and Passive Matrix OLED (PMOLED) playing a crucial role

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AMOLED screens, with their superior contrast ratios, high resolution, thin profile, broader viewing angles, and swift response times, present advantages over PMOLED technology, facilitating applications across smartphones, televisions, tablets, computer monitors, and wearable devicesAs OLED technology, based on organic compounds, progressively replaces traditional LCDs, its market acceptance is on a steady rise.

For instance, Apple's iPhone 12 series completely adopted OLED panels, and other manufacturers have similarly integrated OLED technology in their high-end modelsThe fourth quarter of 2023 saw a rise in OLED product prices driven by the gradual rebound in the consumer electronics sector, coupled with robust sales of flagship models during the end-of-year promotional periodAs a result, Apple's entire smartphone lineup has transitioned to OLED, while the adoption rate of OLED panels in Samsung smartphones exceeds 50%. This trend is encouraging the penetration of OLED display technology into mid and low-end smartphones, with brands like Xiaomi, OPPO, and Vivo incorporating OLED panels into 30%-40% of their models.

Statistical data indicates that by the fourth quarter of 2023, the global market for AMOLED smartphone panels saw an impressive year-on-year increase of 30.9% and a sequential growth of 35.1%. Notably, flexible AMOLED smartphone panels constituted 77.8% of shipments, marking a 9.2 percentage point increase year-on-year

In total, the shipment of AMOLED smartphone panels for 2023 reached approximately 690 million units, registering a 16.1% increase from the previous year, with AMOLED's penetration in the global smartphone market surpassing 50% for the first time.

Looking ahead, flexible AMOLED panel shipments are projected to rise to 580 million units in 2024, sustaining a year-on-year growth of 13.7%. The global OLED panel produção capacity is expected to maintain a double-digit growth trajectory, with a projected growth rate of 20% by 2024, while shipments of smartphone OLED panels are estimated to reach 730 million units by 2025, indicating a potential penetration rate exceeding 60% by that time.

As of 2022, China's share of the global foldable smartphone market reached 26%. Foldable and low-temperature polycrystalline oxide (LTPO) products are becoming the mainstream choices in high-end flagship smartphones

By 2025, the shipment of domestically manufactured foldable smartphones is forecasted to hit 17 million unitsWith more brands venturing into the foldable device arena, global shipments are expected to reach around 34 million units in 2024, presenting a new growth opportunity for the OLED display industry.

Industry experts anticipate that Apple will continue to embed OLED displays in its personal computers and tablet offerings, which would further increase OLED's market penetrationForecasts suggest that by 2028, shipments of OLED displays for laptops and tablets could rise to 72.3 million units, achieving a 14% penetration rate in the laptop and tablet display markets.

The landscape of production capacity is shifting, marked by a significant event in March 2023 when Japanese manufacturer JOLED declared bankruptcy

As global shipments of AMOLED panels sized 9 inches and below reached 842 million units in 2023—a year-on-year increase of 11%—Samsung and LG Display retained the top positions with market shares of 43% and 10%, respectivelyAt the same time, the collective market share of Chinese firms surged to 43%, with BOE's share increasing to 15%, up from 12% in 2022.

Despite these advancements, production costs still represent a challenge for OLED panels, particularly due to the limitations associated with vacuum deposition technologies, adversely affecting yield ratesThe production of larger screens is especially challenging, with yield rates declining as screen size increasesCurrent estimates show that the application of OLED technology in medium to large-sized screens remains minimal, with penetration rates below 3%. According to industry analysts, future production of large-sized OLED screens will likely involve eighth-generation production lines, projected to reduce the unit production costs for medium and large-sized OLED screens by approximately 50%.

Smartphones remain a central field for OLED applications

In the first quarter of 2020, South Korean company Samsung commanded a staggering 90.2% market share in the OLED smartphone sector, while Chinese firms accounted for less than 10%. However, this competitive landscape has seen a remarkable turn as companies like BOE, Visionox, Tianma Microelectronics, and TCL Huaxing have gained substantial ground over the yearsBy 2023, the collective market share of South Korean firms in the OLED smartphone panel market had decreased to approximately 53%, while Chinese firms collectively increased their market share to 43%.

Additionally, BOE's AMOLED division is integral to its display business, with the company shipping nearly 120 million flexible AMOLED panels in 2023. The revenue from OLED phones and innovative applications accounted for 25% of its total, reaching 367.6 billion yuanBOE is actively investing in high-end flexible AMOLED products, notably foldable devices, and has set a goal to achieve 160 million units in shipments for 2024, reflecting a growth rate exceeding 30%. Despite the significant expenses tied to operations and R&D, the OLED sector continues to face profitability challenges.

In the near future, BOE is launching an 8.6-generation OLED production line in Chengdu, employing advanced technologies such as LTPO backplane and tandem setups, primarily targeted toward high-value-added IT products

BOE has already invested in three sixth-generation AMOLED production lines in Chengdu, Chongqing, and MianyangOver the next three years, significant capital expenditures are anticipated for the sixth-generation LTPO/LTPS production lines in Beijing and the 8.6-generation AMOLED lines in Chengdu.

Domestically, OLED production capacity reached 27 square kilometers in 2023, with projections suggesting an upward trajectory owing to the steady progress of BOE's 8.6-generation OLED line, potentially encouraging more Chinese firms to invest in high-generation production lines and enhancing their influence in the medium-sized OLED market.

The continuous evolution in display materials and associated equipment underscores the industry’s momentumIn 2022, the market scale for OLED materials reached $2.09 billion, with the share of domestically produced organic materials approximating 38% in 2023. Among these, common layer materials represent around 17%, while the luminescent layer materials constitute less than 6%. Notably, advancements in red, green, and blue luminescent materials have been made, with the red and green materials employing phosphorescent materials achieving 100% internal luminescent efficiency, while blue materials currently utilize fluorescent materials with 25% internal efficiency.

In the fourth quarter of 2023, the demand for OLED terminal materials surged due to the robust requirements from end-brand clients, leading to substantial sales growth for photonic materials and reaching a record quarterly revenue for Light Optoelectronics

Huairui Optoelectronics has achieved mass production of red and green materials for evaporation OLED applications.

Moreover, Weida Optoelectronics has developed new lightweight polarizers for OLEDs, demonstrating a superior performance compared to traditional polarizersThese new wide-view polarizers and enhanced brightness polarizers are being integrated into AMOLED applications, providing a notable edge in pricing.

Since the second half of 2023, the display industry has entered a robust recovery phase, with escalating material usage reflected in earnings reports from various firmsFor instance, Dinglong Coreported a 17.46% quarter-on-quarter increase in sales revenue for Q4 2023, alongside an impressive year-on-year growth of 174.9%. Furthermore, Ruile New Materials aims to invest 800 million yuan into a project focused on OLED sublimation raw materials and high-end fine chemicals.

As these advancements unfold, the ability of domestic single crystal and OLED material preparation techniques to achieve a global advanced level highlights the upward trajectory of China’s manufacturing capabilities

Growth in the OLED panel market spurred by increasing demand for cost-effective solutions and heightened governmental support for raw materials further cements the trend towards domestic material replacement in the industry.

Additionally, an analysis of cost structures shows that equipment makes up the bulk of OLED panel production costs—accounting for approximately 35%, with organic materials at 23% and driver chips at 7%. As OLED manufacturing equipment occupies an upstream position in the industry, encompassing etching, developing, coating, and packaging stages, firms are concentrated on enhancing production efficienciesThe evaporation source stands out as a crucial component in OLED manufacturing, and companies like Aoleid are expanding their development of evaporation sources tailored for sixth-generation AMOLED panels while also exploring the eighth-generation line technologies.

In light of these investments in OLED production lines, the expenditure on upstream equipment is expected to account for a staggering 80% of total production line investments, underscoring the strong interdependence between display manufacturing equipment investments and industry growth