Report: OLED Panel Production Costs Narrow Gap With LCD
Fans of Organic Light Emitting Diode (OLED) televisions, like those marketed in the United States by LG Electronics, Sony and Bang & Olufsen, will be pleased to know that OLED panel production costs, and eventually sell-through prices, should help to make the format even more popular in the near future.
That’s because the cost of OLED panel production compared to the cost of producing comparable LED-LCD TVs has declined significantly this year.
According to a study from international market research firm IHS Markit, the shrinking difference in manufacturing cost between OLED TV production and LED-LCD TVs should lead to significant expansion of OLED television production volume.
Helping this will be the start-up of new OLED panel production facilities in South Korea, by LG.Display, which is currently the world’s only producer of WRGB OLED panels used in the manufacture of consumer 4K OLED televisions, by LG Electronics and LG.Display customers Sony and B&O in the United States and Grundig, Konka, Loewe, Metz, Panasonic, Toshiba and others in other global regions.
OLED factories from other competitive display panel producers are also expected to come on line in the near future in China and other territories.
Read more on the changing production environment for OLED televisions after the jump:
A new IHS analysis on the “OLED Display Cost Model” estimates that the total manufacturing cost of a 55-inch OLED 4K Ultra HDTV panel averaged $582 per unit in the second quarter of 2017, which reflects a 55 percent drop from costs associated with the 4K UHD OLED televisions at the start of 2015.
The cost is expected to decline further to $242 by the first quarter of 2021, IHS Markit said.
According to the study, the manufacturing cost of a 55-inch 4K Ultra HD OLED panel has declined to 2.5 times that of an LCD TV panel with the same specifications, compared to 4.3 times back in the first quarter of 2015.
This is important, Jimmy Kim, IHS Markit principal materials analyst, said, because “historically, a new technology takes off when the cost gap between a dominant technology and a new technology gets narrower. The narrower gap in the manufacturing cost between the OLED and LCD panel will help the expansion of OLED TVs.”
Kim said it’s not just the cost of materials that determines the cost gap. In fact, when a 55-inch UHD OLED TV panel costs are 2.5 times more than a comparable LCD TV panel, the gap in the material costs is just 1.7 times. Other contributing factors include production yield, utilization rate, depreciation expenses and substrate size.
The study indicates the total manufacturing cost difference between OLED and LED-LCD 4K panels will be reduced to 1.8 times from the current 2.5 times when the yield is increased to a level similar to that of LCD panels.
“However, due to the depreciation cost of OLED, there are limitations in cost reduction from just improving yield,” Kim added. “When the depreciation is completed, a 31 percent reduction in cost can be expected from now.”
For additional information, interested parties can purchase a copy of the The OLED Display Cost Model by IHS Markit here.
By Greg Tarr
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