It is heard that Samsung Display will supply Flexible OLEDs (Organic Light-Emitting Diode) to Apple for iPhones. Maximum of $7.47 billion (9 trillion KRW) of plant and equipment investment is expected.
According to industries on the 13th, contract between Samsung Display and Apple regarding Flexible OLED Panels for iPhones has practically been decided. Samsung Display will provide the most supplies for Apple’s iPhones’ panels that are changing from LTPS (Low-Temperature Poly-Silicon) LCD (Liquid Crystal Display) to Flexible OLED.
Samsung Display has decided on the size of investment to extend current facilities with Apple and will receive orders from Apple starting from end of 1st quarter at the earliest. It is heard that size of investments this year will be at least 30,000 sheets per month to 45,000 sheets per month. A plan to invest additional 45,000 sheets per month in 2017 is also included in this contract.
According to this contract, Samsung Display will invest somewhere between $2.49 billion and $3.32 billion (3 trillion KRW and 4 million KRW) for plant and equipment this year. If additional 45,000 sheets are added in 2017, it will carry out total of $6.64 billion to $7.47 billion (8 trillion KRW and 9 trillion KRW) in investment.
It is heard that Samsung Display is also pushing for a plan to extend its facilities by 15,000 sheets per month more for Galaxy Smartphones and Chinese Smartphone manufacturers. If these supplies are included, Samsung Display’s investment this year will increase by more than $830 million (1 trillion KRW).
South Korean display front-end process equipment business called AP System and inspection equipment business called HB Technologies have first signed on supply contracts regarding a contract that is made between Samsung and Apple.
AP System is a South Korean display equipment business that recently has Samsung Display become its second biggest shareholder. It specializes in this business as equipment regarding OLED takes up 90% of its sales. It is the only business in the world that supplies LLO (Laser Lift-Off) equipment that is used to strip off glass substrates when film is formed on top of glass substrate by coating polyimide (PI) solution during Flexible OLED process. It is also recognized for its competitiveness in ELA (Excimer Laser Annealing) equipment that makes LTPS crystal with laser during OLED process. It also supplies equipment that encapsulates organic matter during manufacturing for LTPS OLED Panels.
AP System made a so-called ‘Black Public Announcement’ regarding supply contract of manufacturing equipment in the afternoon of the 12th. It is a public announcement that does not reveal any amount or businesses regarding contracts due to special request from a business to protect its business’s privacy until the 30th of March. Expiration date for this contract is the 15th of August.
Industries believe that AP System, which has Samsung Display as its major customer, is participating in a business that will supply Flexible OLEDs to Samsung Display for Apple since there are no other reasons to make ‘Blank Public Announcement’ when it does not supply much products to China.
“It is common that contracts are made by splitting sizes of supplies so that businesses can be excluded from public announcements due to requests for privacy regarding contracts with Apple.” said a person related to display industry. “It seems that AP System made such public announcement because Samsung Display needs to first secure LLO and ELA equipment from AP System.”
AP System’s sales in 2014 were $145 million (175 billion KRW). Considering a fact that ‘Blank Public Announcement’ is made when an order is worth more than 10% of yearly sales, AP System has won an order that is worth at least $14.1 million (17 billion KRW). To preoccupy major equipment, it is heard that Samsung Display has also recently requested a lot of orders for deposition equipment from TOKKI and lithography equipment from Canon.
Around the same time on the 12th, HB Technologies made a similar announcement. It made an announcement that it cannot reveal the name of its customer until the 30th of March due to its customer’s request although it has won an order that is worth $32.7 million (39.4 billion KRW) that is equal to 29.55% of its yearly sales. Expiration date for this contract is the 30th of July.
Industries are predicting that OLED investments will be carried out starting from the 1st quarter at the earliest. If LG Display also joins in plant and equipment investment, there can be shortages for major equipment that requires relatively long period of time for manufacturing.
Other than AP System and HB Technologies, other South Korean display equipment businesses are also expecting to win additional orders from Samsung Display. SFA and SNTEK have distribution equipment while WONIK IPS, SFA, Jusung Engineering, and SNU Precision have for deposition and encapsulation equipment for OLED. EO Technics has polyimide laser cutting equipment for OLED while Viatron has heat processing equipment for LTPS and oxide processes and polyimide cutting equipment. OLED inspection equipment businesses such as Youngwoo DSP and others are also looking for opportunities in this business.
It is expected that material businesses also benefit from this. It is predicted that sales for Duksan Neolux that supplies OLED organic material, WONIK Materials that supplies special gas for OLED manufacturing, SKC Kolon PI that provides polyimide, WONIK QNC that specializes in lamp for cleaning displays and ceramic parts, TES that specializes in vacuum robots for displays and others will greatly increase.