The Zhitong Finance App learned that Fangzheng Securities released a research report saying that the Mini LED backlight has higher brightness, lower power consumption, and better natural display effects. The display effect is close to OLED, and at the same time, it is more economical. The bank believes that in the short to medium term, there are two important catalysts for Mini LED in the future: 1) the gradual penetration of the medium and large screen market; 2) the replacement of LED small-pitch screens. In the medium to long term, automotive displays are also gradually transforming to Mini LED, which is expected to take over and become a new driving force for the development of Mini LED. Related targets: Xinyichang (688383.SH), San'an Optoelectronics (600703.SH), Zhouming Technology (300232.SZ), Xinruida (002983.SZ), Huacan Optoelectronics (300323.SZ), Zhaochi Co., Ltd. (002429.SZ).

Fangzheng Securities's views are as follows:

MiniLED has entered the release period.

The Mini LED backlight has higher brightness, lower power consumption, and a better natural display effect. The display effect is close to OLED, and at the same time, it has better economy. According to ResearchDive data, the global mini LED scale is about 410 million US dollars in 2021, and is expected to grow at a compound annual growth rate of 44.48% to about 10.93 billion US dollars in 2030. The bank believes that in the short to medium term, there are two important catalysts for Mini LED in the future: 1) The gradual penetration of the medium to large screen market. 2) An alternative to LED small-pitch screens. In the medium to long term, automotive displays are also gradually transforming to Mini LED, which is expected to take over and become a new driving force for the development of Mini LED.

Micro LED: Large display+smartwatch applications first launched.

At this stage, large displays are the main application scenarios for Micro LED. In 2023, Samsung and LG will launch microLED TVs one after another, and BOE is expected to launch microLED displays by the end of 2023 and the beginning of 2024. Since small-sized microLEDs have lower requirements for mass transfers, the pace of mass production and implementation is also relatively fast. According to TrendForce estimates, the production value of Micro LED chips in 2023 will be US$27 million, yoy +92%, mainly driven by large displays and smartwatches. It is estimated that the production value of Micro LED chips will reach 600 million US dollars in 2027, and the increase in micro LED applications mainly in AR glasses and automotive display markets will usher in growth.

COB+ virtual pixels help reduce costs:

COB (Chip On Board): A technology that interconnects multiple LED chips to a substrate and packages them together. The solution uses an overall packaging method, which does not require SMT patching and reflow soldering, etc., and the process is greatly simplified. The high density of the final product helps MiniLED reduce costs quickly. Take the light source part of a 1.2m fluorescent tube as an example. Using a COB light source, the cost of the entire 2000lm solution can be reduced by more than 30%.

Virtual pixels: The RGB pixels are split into N independent LED units, thereby breaking through the ceiling of actual pixels and effectively improving the display effect. On the cost side, when achieving the same resolution, virtual pixel technology can reduce the amount of LED chips used and significantly reduce costs. The virtual pixel cost of the Zhongqi Optoelectronics P1.25 RGB three-lamp is only 30% of the real pixel.

Risk warning: downstream demand falls short of expectations, panel price fluctuations, supply chain risks.