China's Flexible Panel Production Capacity Will Catch Up With Korean Panel Factory After 2020

Samsung and Huawei have released folding phones. On February 20th, Samsung released the folding screen mobile phone Galaxy Fold. On February 24th, Huawei launched the long-awaited 5G folding screen mobile phone Mate X.

The core technical difficulties behind the folding screen mobile phone are concentrated on the OLED panel. The dispute between Huawei and Samsung's folding screen mobile phone is largely a confrontation between the upstream supply chain of China and South Korea's electronics industry.

With the saturation of the smartphone market, manufacturers see folding phones as a promising design to stimulate more demand. TrendForce Photonics Research (WitsView) believes that two-year folding phones should still be in the stage of understanding market response and adjusting product design. It is estimated that by 2019, folding phones will only account for 0.1% of the penetration rate of the smartphone market. Waiting for more panel suppliers to join, the panel cost will increase significantly, the penetration rate of folding mobile phones in 2021 will have a chance to break through 1%, and accelerate to 3.4% in 2022.

According to Ove Ruiwo, the demand for smartphone OLEDs in 2019 was about 450 million pieces, a year-on-year increase of 37%. Among them, about 200 million flexible OLEDs, as well as handset manufacturers led by Samsung and Huawei will consume about 1.1 million foldable OLEDs.

From the perspective of panel supply, WitsView points out that not many manufacturers are able to supply folding panels steadily at this stage. In the past, the production capacity of OLED panels was mainly monopolized by Samsung and LG in South Korea. Domestic companies inevitably “get into trouble” and have to pay attention to the face of South Korea. However, in recent years, domestic manufacturers represented by BOE, Tianma and Huiguang have begun to exert their strengths. Domestic flexible OLED panels have also successfully entered many domestic mobile phone supply chains and achieved mass production.

From the perspective of mobile phone manufacturers, Samsung relies on its own panel resources, and there is no need to worry about insufficient supply. Huawei must rely on China's panel factories, but the scale may still be affected by technology and production. As for other mobile phone brands, it is limited by the lack of stable panel supply, which may become the bottleneck of the initial development of folding phones.

WitsView observed that for Chinese panel makers, flexible AMOLED panels are still in their infancy and have limited supply capacity. Current production capacity accounts for approximately 27% of global production. In the short term, Korean manufacturers have an absolute advantage. However, in the next two to three years, the capacity of Chinese panel makers' new flexible AMOLED panels will gradually be put into production. After 2020, China's flexible AMOLED production capacity will gradually catch up with the capacity of Korean panel makers.