While Samsung Electronics' spin-off of its LCD operations will boost the short-term competitiveness of the business, the long-term benefit may be domination of the next wave in display technology: AMOLED, according to IHS iSuppli.

Samsung said recently it will spin off its LCD business into a new company called Samsung Display on April 1. The next move for Samsung Display may be a merger with Samsung Mobile Display (SMD), a joint venture between Samsung Electronics and Samsung SDI that makes both LCD and AMOLED displays.

"Samsung's LCD division is the world's second-largest LCD panel maker in terms of unit shipments, while SMD is the top supplier of AMOLED displays," observed Sweta Dash, senior director for liquid crystal displays at IHS. "A merger would allow the new company to combine its OLED expertise with internal prodigious experience and market influence in the LCD segment. Because of its myriad advantages, OLED represents the future of display technology, representing a huge growth opportunity in the coming years."

Samsung in 2011 commanded a 22.9% share of the global large-sized LCD shipments, second only to LG Display, with a 25.8 % share. However, SMD dominated the AMOLED space, with an 85% share, compared to 15 % for LG Display.

While the AMOLED market is tiny compared to the massive LCD segment, the new technology holds the potential for much-faster growth given its emerging status compared to the mature LCD segment. Global AMOLED shipments are set to rise at a compound annual growth rate of 29 % from 2011 to 2015, compared to 5.8% for LCDs.

AMOLED panel production costs presently are considerably higher than for LCDs, especially for large-sized TVs that are 55-inch and bigger. Production of AMOLEDs is conducted only at 4.5G and 5.5G fabs, which are capable of making only one to two displays that are 55-inch in size on one substrate. In contrast, 8.5G LCD fabs can make six 55-inch displays on a single substrate. This limitation is driving up manufacturing costs for AMOLEDs.

Furthermore, yields for the larger sized AMOLED panels are low – and the limited number of materials suppliers also is driving up costs. These means production costs and prices for 55-inch AMOLEDs will remain high for the next few years.

However, companies are investing in AMOLED production and technology, which will drive down costs further in the future.

Leading the way is SMD, which is making the largest investment in AMOLED manufacturing, with the company planning an 8G fab in the second half of 2013. However, LG Display, Chi Mei Innolux (CMI), AUO Irico and Tianma Micro-electronics are all aiming to enter or expand their operations in the AMOLED market. LG Display's current AMOLED capacity is limited to a 4.5G fab, where the company is making panels for smartphones. However, LG also plans to commence operations at its own 8G AMOLED fab in 2013. 

Source:digitimes