The Zhitong Finance App learned that Huajin Securities released a research report saying that the adoption of OLED technology by leading consumer electronics companies such as Apple will drive an increase in the penetration rate of OLED technology in high-end flagship tablets, and OLED panels will usher in faster market growth in 2024. Furthermore, as Samsung Display (SDC) and BOE's 8.X generation OLED production lines are expected to officially enter large-scale mass production between 2026-2027, it is expected that the price of OLED panels will be reduced. Recommended attention: BOE A (000725.SZ), Shenzhen Tianma (000050.SZ), Vicino (002387.SZ), Huaying Technology (000536.SZ)), Longteng Optoelectronics (688055.SH), Qingyue Technology (688496.SH), etc.

Incident: Samsung Display said on March 10 that an “A6 production line equipment introduction ceremony” aimed at building a G8.6 OLED production line for IT was held on March 8 at the Asan factory in South Chungcheong Province. The A6 production line will transform the L8 production line that used to produce large liquid crystal displays (LCDs). A6 is Samsung's 6th OLED production line and the world's earliest 8th generation OLED production line for IT. The plan is to start with the introduction of an evaporator and complete the installation and commissioning of the main equipment within the year, with the goal of formal mass production in 2026.

The views of Huajin Securities are as follows:

OLED panel shipments of various products increased significantly in the second half of '23 compared to the first half of the year. BOE accounted for nearly 50% of annual tablet panel shipments.

According to DSCC data, shipments of 2023Q4 OLED panels reached 292 million pieces, up 41% month-on-month and 31% year-on-year. By product, 2023H2, OLED smartphones increased 42% from the first half of the year, up 12% year on year; OLED smartwatches increased 101% from the first half of the year, up 1% year on year; OLED tablets increased 58% from the first half of the year, up 15% year on year; and OLED laptops increased 64% from the first half of the year. In the tablet sector, BOE's shipments are at the top of the list. According to Qunzhi Consulting data, among tablet panel shipments in 2023, BOE (BOE, 49%), Innolux (16%), LG Display (LGD, 10%), Hannstar (8%), and Huike (HKC, 6%) ranked in the top five, with an overall market share of 90%.

a-Si LCD is the main producer of tablet panels. The new iPad Pro may be equipped with an OLED panel, which is expected to accelerate the penetration and increase of OLED panels in the tablet field

According to Qunzhi Consulting data, (1) a-Si LCD: a-Si LCD panels are still the preferred solution for major brands in cost control strategies due to their high cost efficiency. In the 2023 global flat panel shipping technology category, a-Si LCD remained the main shipment force, accounting for 86% of shipments, with a slight increase of 0.1 pcts over the previous year. (2) LTPS LCD: Unlike a-Si LCD, LTPS and Oxide are mostly used in high-end models due to their low power consumption and high brush advantages, and the demand targets are all brand customers. Benefiting from the weakening demand for LTPS LCDs from smartphones, panel manufacturers actively promoted the transfer of LTPS LCDs to medium-sized products such as tablets, and superimposed LTPS panels with a resolution of about 2K with a cost advantage, causing a significant year-on-year increase in demand for LTPS LCDs in 2023. In the 2023 global tablet panel shipping technology category, LTPS LCD shipments accounted for about 6%, and the shipment volume was about 15.3 million pieces, an increase of 24% over the previous year. (3) Oxide LCD: Oxide LCD technology is positioned between a-Si LCD and LTPS LCD. It uses LTPS technology that is superior to the 8th generation line in terms of cost, and can also meet the requirements of high resolution, high refresh rate, low power consumption, etc., and is positioned as a mid-to-high-end product. Apple is the main demand for Oxide LCD panels, accounting for 70% of Apple's demand in 2023. (4) OLED: Limited by price, the penetration of OLED technology in the tablet field is relatively slow. In 2023, the penetration rate of OLED panels in global panel panels will be about 2%. The supply mainly comes from SDC, EDO's ROLED, and BOE's FOLED. The customer structure includes Samsung, Lenovo, Huawei, etc., and the products are all positioned as high-end flagship models. In 2024, Apple's iPad Pro panel technology is expected to switch to OLED technology, which will drive the OLED penetration rate to increase. According to Qunzhi Consulting's forecast, the global OLED panel penetration rate is expected to reach about 5% in 2024, of which Apple demand will account for 60%.

BOE's 6 OLED production lines, with a total design capacity of 278K/M (including planning and construction)

According to Vico Network, BOE has invested a total of 6 mass production lines (B6, B7, B11, B12, B15, B16) in the OLED panel field, with a total investment amount of 271 billion yuan. Among them: (1) the B6 plant in Ordos operates a G5.5 AMOLED production line, with a total investment of 22 billion yuan, with a design capacity of 54K/M; (2) the Chengdu B7 factory operates a G6 AMOLED production line. The production line is planned in 2015, with a total investment of 46.5 billion yuan, with a full load capacity of about 48K/M; (3) the Mianyang B11 factory operates a G6 AMOLED production line. The production line began construction in 2016, with a total investment of 46.5 billion yuan, with a design capacity of 48K/M; (4) Chongqing B12 is operating Ichijo G6 AMOLED production line. The production line began planning in 2018, with a total investment of 46.5 billion yuan, with a design capacity of 48K/M; (5) the Fuzhou B15 plant is still in the planning state. It is planned to build a G6 AMOLED production line in Fuqing City, with a total investment of not less than 46.5 billion yuan, with a design capacity of 48K/M; (6) Chengdu B16 factory plans to build a G8.6 AMOLED production line. Currently under construction, the B16 plant is being built in two stages, with a cycle of about 34 months, with a total investment of 630630 billion yuan. 32K/M

Risk warning: the risk that demand in the downstream terminal market falls short of expectations; the risk that new technologies, new processes, and new products will not be industrialized as scheduled; the risk that Apple and other companies will not be able to introduce products as expected; the risk that market competition will increase the risk; and the risk that the progress of production capacity expansion falls short of expectations, etc.