TAIPEI, Taiwan Display manufacturers in Taiwan and South Korea are taking a measured view of the near-term prospects of organic LEDs, which generated heady excitement at the Society for Information Display 2002 conference last week.
Taiwan manufacturers are in the midst of a massive ramp-up of TFT-LCDs, which they expect will soon overtake traditional CRTs as the display du jour for desktop PCs. The same ramp-up is occurring in South Korea. Manufacturers in both countries are key suppliers and enablers of flat-panel displays, so their outlook and practices will influence the transition of OLEDs from popular gizmo to commodity item.
While about 50 companies worldwide are estimated to be investigating OLED technology, only a few companies in Taiwan are active on the OLED front, though more are expected to invest hundreds of millions of dollars over the next few years.
But even advocates said they don't know when the technology will be able to overcome its relatively higher price tag vs. TFT-LCDs. "That's a difficult question. I believe OLED will replace LCD, it is just a time issue," said Jang Hyuk Kwon, a project manager at Samsung Electronics Co. Ltd.'s center for OLED research. "OLED is a superior technology to LCD but the cost is the problem. But development of OLED is moving along very fast, so maybe in 10 years it can do it."
The worldwide market for OLEDs is estimated at roughly $100 million for 2002 and is projected to grow to $2.8 billion by 2007 as OLEDs begin to penetrate small-form-factor applications, such as cellular phones and PDAs, according to market analyst Display Search. OLED technology offers inherently superior performance versus incumbent displays, where high switching speed and high contrast are required. The technology is brighter, thinner, faster and lighter than LCDs, uses less power and is cheaper to manufacture in the long run, according to Display Search.
Currently, OLEDs look to have a shot at success in handheld products. Active-matrix OLEDs are expected to own about 40 percent of the PDA market by 2006, according to Display Search. In cell phones, they will garner about 8 percent of shipments.
But even then, those shipments would only account for about 4 percent of the total flat-panel display market. And some doubt OLEDs will get even that far. "Right now, what OLED can do, LCD can do," said Jacob Lin, chief executive officer of Taiwan's Picvue Electronics Group, the largest supplier of displays to the PDA market. "Only if you find an application that OLED can do, then you have a chance. But right now there aren't many mainstream examples of that."
In the big-money, high-volume portion of the market for notebook displays and desktop PC monitors OLEDs look set to struggle for the next several years. After about 25 years of development, LCDs are only starting to make the transition to a prevalent monitor choice, and only after a hard-core price war last year, which highlighted the dominant role of cost in making display transitions.
In late 2000 and early 2001, the street price of TFT-LCDs plummeted, making them more attractive than ever to consumers. Manufacturers, however, were losing money. During that price squeeze, the notoriously cost-conscious Taiwanese pressed their hand, boosting output 25 percent to 50 percent every quarter.
After a disastrous 2001, rising panel prices now are spurring LCD manufacturers to continue aggressive ramp ups of new plants in Taiwan, China and Korea in hopes of resuscitating their bottom lines. The Taiwanese, in particular, have poured money into new fabs, laying out billions of dollars between 1998 and 2001 for third- and fourth-generation plants, according to Taiwan's Industrial Technology Research Institute.
"Profits should be pretty good this year," said Mark Fihn, an analyst with Display Search. "As the price gap narrows between LCDs and CRTs, the demand grows. But the worry is that as the price goes up [for LCD displays], the demand will sour."
With the Taiwanese pushing hard, the industry is quickly developing the moody boom-bust dynamics of other electronics commodities, such as DRAM. In an aggressive scenario, Display Search estimates LCDs will overtake CRTs in 2004, as more companies, such as Dell Computer Corp., sign on to the idea of bundling LCDs with computers. Yet while the proliferation of plants means LCDs galore, it also means more frequent and sharper ups and downs.
Under that scenario, companies that can make and market OLEDs effectively will reap higher margins. Samsung's Kwon is optimistic. "After 2005, OLED will enter the TV market," he said, adding that R&D at Samsung is focusing on overcoming substantial technical challenges in larger display sizes. That is also the case for Sony Electronics and Toshiba Corp.
Longtime observers of the industry, however, can't help but be a little pessimistic of these grand visions of growth. "I've heard a lot of these ideas before," said J. Norman Bardsley, director of road maps and standards at U. S. Display Consortium.