IT display applications: market, equipment expenditure and future outlook

As the display industry continues to diversify in terms of panel size, resolution, aspect ratio, applications and technology, the boundaries between different display scenarios, what the panels are designed for and how they are used continue to blur. There are many examples now, such as smartphones that act like tablets, TVs used for public displays, monitors used as TVs, and the list goes on. So in today's market, it is becoming increasingly difficult to classify display panels by application.

Although there are many different flat panel display technologies and implementations, in most cases there are not particularly significant differences between these display technologies in actual applications. The main difference between applications is size. For this reason, most LCD factories can produce panels of various sizes, aspect ratios, and resolutions on the same line. That being said, there are some limitations to this theory in actual production; for example, it does not make much sense to produce smartphone panels in a 10.5-generation factory. However, at the same time, there are several 8/8.5-generation factories that produce smartphones, IT, and TV panels on the same line.

This production flexibility is one of the reasons why FPD costs continue to decline over time. This flexibility allows panel manufacturers to schedule various panel types in the factory to maximize productivity. This production flexibility is built into FPD factories and allows panel manufacturers to quickly change production plans to meet customer orders and pursue more profitable products while avoiding missing out on leading-edge size and application demand. This flexibility exists between FPDs with the same basic display technology, such as a-Si or oxide LCD; it is generally not applicable across display technologies.

Therefore, it is difficult to model supply and demand by application (such as IT), for example, comparing IT to TV. Factories and production capacity are not application-specific. Also, factory production plans change at short notice based on market conditions, and it is difficult to predict what will happen a quarter later.

Modeling equipment spending by application faces the same problem. IT panels are still almost entirely a-Si and oxide-based LCDs. Between 2002 and 2004, IT applications accounted for more than 60% of flat-panel display revenue because, with a few exceptions, no new IT-specific factories were built, and the main IT panels were produced on Gen 5 lines. Since then, most new flat-panel display factories have been aimed at the production of TV or smartphone panels. As TVs are manufactured on increasingly larger substrates, many older TV factories have shifted production to IT panels. At the same time, some new Gen 8 factories have also allocated some capacity to it to diversify their product roadmaps.

Although a-Si LCD TVs and IT panels are manufactured using similar processes, upgrades, new processes, factory renovations, and new equipment may be required when a fab moves production between panel types. For example, if you switch from vertical alignment (VA) mode LCDs to in-plane switching (IPS), you may need to purchase rubbing equipment. If you produce more and smaller notebook panels, you will need to purchase more equipment for sealing, scribing, polarizer lamination, inspection stations, etc., which are set up to handle panels of a specific size to maintain production capacity. In addition, as IT panel makers move from twisted nematic (TN) to IPS—usually negative fringe field switching (FFS) technology—they may adopt photoalignment technology and may need more new equipment. These production line upgrades are important, but usually only a small part of the cost of building a new flat-panel display factory.

All of these reasons make it challenging to forecast equipment spending by IT application. Even so, as the following analysis shows, it is possible to adopt broader assumptions about average equipment configurations for long-term IT production and make general assumptions about annual upgrade spending when investing in new plants.

The following figure compares the equipment expenditure for IT applications with the total expenditure. It can be seen that in the past decade, the equipment used for IT panel manufacturing has only accounted for a small part of the total FPD production equipment expenditure. However, if OLED can be used in IT panel production on a large scale in the future, the proportion of IT display panel production equipment in the total FPD display equipment expenditure is expected to increase rapidly.

The above arguments have some limitations. For example, the adoption rate of OLED in IT applications is a very open question. Due to the high cost and high power consumption of OLED in IT applications, its market expansion in IT panels may be very slow.

In the next five years, how quickly OLED will enter IT applications will be an important market trend. Panel manufacturers will move into more IT fields as quickly as possible to meet the large amount of OLED production capacity that is currently in place and under construction. As demonstrated at the 2020 Consumer Electronics Show (CES), notebook and monitor manufacturers will develop new devices using OLED panels for the high-end display application market to differentiate their products and form differentiated competition.

IT applications for FPDs are currently a small fraction in terms of revenue and region. However, notebooks and monitors are critical to the flat panel display industry as they carry a large amount of daily and work communication in this digital world. Going forward, if panel and TV makers can successfully push OLED into notebook and monitor applications, it may also account for an increasing share of flat panel display equipment spending and panel revenue.

Source: IHSMarkitTMT