CAGR
Back around March of this year, iSuppli analysts forecast a shortage of LEDs that would significantly impact makers of LCD TVs. Unbeknownst to many, the industry must’ve rallied behind the scenes and derailed impending doom, as there seems to be no shortage of LCD products. And judging by the number of new products that have come over the wire since that prediction, no one seems to be feeling LCD deprived.
Now iSuppli sees smart-phone makers, particularly those who make Android models, as victims of an active-matrix organic LED (AMOLED) shortage. According to iSuppli, dwindling supplies of the compact AMOLED displays will impede the technology’s chances for surpassing active-matrix LCDs (AMLCDs) and variations thereof in the smart-phone arena.
The Numbers
Compiled by iSuppli analysts, the numbers focus on shipments of small-sized AMLCDs and AMOLEDs measuring 9 in. diagonal or smaller from 2009 through 2014. They project AMOLED displays for cell phones to hit 184.5 million units by 2014, up from 20.4 million in 2009, representing a compound annual growth rate (CAGR) (see the figure) of 55.1%.
The 55.1% CAGR is a significant figure, though AMLCD shipments will rise from 1.3 billion in 2009 to 1.75 billion by 2014. So while AMOLEDs will see growth calculated by the millions, AMLCDs will be counted by the billion. Could this be the result of conditions other than a material shortage? Perhaps AMLCDs are less expensive and therefore more available.
“Starting with the Nexus One introduced in January, Android-based smart phones have aggressively adopted high-quality AMOLED displays as a competitive differentiator against the advanced-technology AMLCD screen used in the iPhone. However, rising demand, combined with a limited supply base, has led to the constrained availability of AMOLEDs,” says Vinita Jakhanwal, principal analyst for small and medium displays at iSuppli.
AMOLED displays do have desirable characteristics, which give them the competitive edge. For one, they require no backlights, enabling power savings and much thinner designs. But iSuppli also says that AMLCDs provide superior performance, with better fast-motion display and a richer color gamut than AMOLEDs. Since there appears to be a tradeoff brewing here, maybe the logical approach is to use an OLED to backlight an AMLCD. At any rate, whichever technology is superior, we need to address this OLED shortage.
Suppliers
According to iSuppli, there are only two sources for AMOLED displays: Samsung Mobile Displays (SMD) and LG Displays. SMD expects to ramp production higher by 2012. However, LG has not increased production yet, with little known of its plans to do so. Some South Korean companies such as AU Optronics and TPO Display may introduce AMOLED products at the end of 2010 or early 2011, but significant contributions are not yet evident.
With little inventory, handset OEMs may be a bit nervous about future production. So if the demand for these AMOLED displays is so huge, why aren’t suppliers scrambling to the task?
It kind of gets back to an earlier proposition: cost. As per iSuppli, with established manufacturing and fabrication, mature AMLCD technology has the cost advantage. Also, improvements in performance paired with market familiarity give AMLCDs further perks.
One way of interpreting this is that the manufacturers are sitting back and watching the progress of this new AMOLED technology in contrast to AMLCDs and weighing all the options. If the forecasts and observations prove true, if AMLCDs achieve some performance breakthroughs with no increase in cost, why ramp up a new technology with marginal benefit boosts with a higher price tag, whether the demand is high or not?