Samsung Display's Investment in 8G OLED Panels for IT Faces Uncertainty Due to Equipment Costs and Supplier Choice

Samsung Display (SDC) recently announced its investment of KRW 41 trillion (approximately USD 3.1 billion) until 2026 in the production of eighth-generation (8G) OLED panels for use in IT products, making it the latest battleground for OLED displays after smartphones. However, the delay in procuring the key equipment for the production line has caused concern and discussions within the industry in Korea.

According to Theelec, a Korean news outlet, 8G OLED panels for IT have become the next highly anticipated battlefield. Compared to 6G production lines, 8G lines use larger glass substrates, which are more efficient for production. However, if SDC agrees to the quoted price of Canon Tokki's coating machine, it is expected that 8G OLED production lines may have difficulty in making a profit.

The Canon Tokki 8G OLED production line coating machine, which is priced at over KRW 1.5 trillion if based on a monthly input of 15,000 glass substrates, could exceed KRW 2 trillion when combined with exposure equipment. This means that more than half of the KRW 41 trillion investment in SDC's 8G OLED production line for IT could go to Canon Tokki, with the remaining funds shared by Korean and foreign equipment vendors.

In order to make the production of 8G OLED panels for IT economically viable, the production cost of the panels should be lower than that of 6G lines. However, the high cost of equipment has made the investment in 8G lines uncertain. SDC's 8G OLED panel production line for IT currently uses a single-stack design for the emitting layer to lower material costs.

SDC's investment in 8G OLED production lines for IT is based on the belief that it will once again lead market development. However, in the long run, assuming that OLED panels have a penetration rate of 50% in the global NB market, the global demand for 8G OLED production lines based on glass substrates would reach 150,000 panels per month, and SDC would need to ensure a production capacity of at least 60,000 panels per month to lead market development.

Therefore, the price of the first coating machine that SDC orders is particularly important because it could serve as the "foundation" for future additional investments in 8G OLED production lines for IT. Many industry players, including BOE and Visionox, may also purchase 8G OLED production line coating machines from Canon Tokki in the future. Hence, the initial price SDC pays for the coating machine is expected to affect the purchasing and investment decisions of other industry players in the future.

Canon Tokki is known for its "hard-line" approach to pricing, as it is aware that Apple favors its equipment. SDC has no choice but to purchase from Canon Tokki to establish an 8G OLED panel production line for IT. Previously, SDC was reported to have partnered with Japanese company Ulvac to develop full-cutting vertical coating technology, but the difficulty of this technology has led to delays in investment and cooperation.

Sunic System, which is part of LG Display's supply chain, has a long-standing partnership with LGD in developing coating machines, and its low equipment prices are one of its major advantages. Recently, news emerged that Apple has approved Sunic System's 8G OLED coating machine for use, reversing its previous position of only allowing the use of Canon Tokki's equipment.

According to Korean media reports, Samsung Display (SDC) could face a worst-case scenario if they choose Canon Tokki over Sunic System as their OLED deposition machine supplier. This could result in SDC's IT-grade 8th generation OLED panels having similar performance and yield rates as LG Display's (LGD) panels, but at a higher price point, potentially leading to Apple placing a larger share of its orders with LGD.

The OLED panels for Apple's iPad are currently being developed on the 6th generation production line by SDC and LGD. The 11-inch panel is estimated to cost around $270, while the 13-inch panel is estimated to cost around $350. The final price of the 11-inch OLED iPad is roughly estimated to be around $1,500, while the 13-inch OLED iPad is estimated to be around $1,800. However, as the development is still ongoing, the final price may change.