According to IHS, Samsung Display’s average AMOLED fab utilization rate started to plunge from the end of 2017. It remained in the 50% range until May, due to low seasonality and weaker-than-expected demand from major customers.
In H1 2018, glass input at the A3 fab fell significantly short of the capacity that nearly doubled in H2 2017. Contrary to expectations that the fab would enjoy a surge in flexible AMOLED panel demand following the launch of new smartphones from Samsung Display’s key customers, especially from Apple, it grappled with lower-than-expected demand. In H1 2018, utilization remained low in both A1 and A2 fabs due to growing competition from LTPS LCD panels in the smartphone display market and disappointing demand from Chinese customers.
However, the average monthly utilization rate at Samsung Display’s AMOLED fabs is expected to increase significantly to above 80% in Q3 2018. The A3 fab, which accounts for the lion’s share of Samsung Display’s AMOLED panel production, will see its utilization jump due to the upcoming launches of Samsung Electronics’ and Apple’s new smartphones and a recovery in seasonal demand. With increasing demand from Chinese customers, utilization at A1 and A2 also started to soar from June.
In Q3 2018, total glass input area at Samsung Display’s AMOLED panel fabs will top the previous record high. It reached nearly 600,000 m2 in Q4 2017 but plummeted to 333,000 m2 in February 2018. In Q3 2018, it is forecast to nearly double from the February low.
In H1 2019, demand for Samsung Display’s AMOLED panels is expected to decline from that in the end of 2018, driven by the typical slowdown in panel demand for new smartphones and the year-end shopping season. However, utilization rates will not likely fall to the H1 2018 level due to the growing adoption of AMOLED by its customers, the launch of foldable panels, and increasing demand for curved products.
However, it is uncertain whether the jump in overall utilization rates will bring forward the mass production start date of the A4 fab, which has been delayed due to low utilization at other existing fabs; rather, it depends more on whether Samsung Display will succeed in adding more customers and expanding the AMOLED business into new applications, the key to the sustainable growth of its AMOLED business.
