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Technology Stocks : OLED Universal Display Corp
OLED 208.93-3.0%Jun 18 4:00 PM EDT

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To: slacker711 who wrote (25869)4/21/2021 12:10:41 PM
From: chessboard_andy2 Recommendations

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Dkjunior143
oled2b

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I am not sure I entirely agree with your assessment Slacker. LG Display is enjoying great pricing power right now on both the LCD and OLED side of production and I know that they are delighted with profitability as a change of pace.

I do think they will announce expansion beyond the extra 30K 8.5G sheets prior to rewriting the entire playbook with a completely novel production process. The real questions are (1) When (2) Where and (3) What Size Mother Glass.

Regarding (1) When: I have recently gone back and reviewed the timing of prior official announcements about CapEx commitments regarding the OLED build-out. Timing around the Q2 earnings release in July seems to be the key for CapEx announcements. (Whether or not they come to fruition is a different matter.) Examples:
  • 7/25/2017 was the original announcement about the Paju 10.5G line and the original announcement of the Guangzhou line
  • 7/10/2018 announcement of the JV to build the Guangzhou line was accepted and gave more details
  • 7/23/2019 was an additional 3Trillion KRW commitment to Paju 10.5G as well as the first official mention of MMG
  • 7/23/2020 they announced the opening of Guangzhou

The pause on the Paju line construction never came from an official release.

Regarding (2) Where: I think the idea of getting Chinese state subsidies for CapEx is pretty attractive, and as best I can tell the build-out and ramping at Guangzhou within the context of a pandemic went much smoother than I would have expected. I anticipate this may be a factor as to what may be announced in July. As a counterpoint, there is always going to be pressure to keep production in Korea, and we know that the footprint at Paju will support additional lines.

Any new technologies and processes are almost certainly likely to happen first at Paju. The fab buildout was considerate of handling 10.5G size glass, and there are always IP concerns relating to new processes staying within South Korea.

Regarding (3) Size: I'm still guessing that the implementation of MMG makes 10.5G investment much less likely. Processing on a 60 square foot piece of glass is very different than a 110 square foot piece of glass. Scaling up is hard sometimes, and the machinery will very likely have lower yields and a slower throughput.

One of the key reasons in favor of 10.5G glass was the extreme level of waste with 65" and 77" screens. Careful implementation of MMG mitigates that issue immensely. There is obvious demand for the 48" and 32" screens that can be built alongside the big screens to get back to 85%+ glass utilization. Perfecting, refining and speeding up MMG seems like a much more straight-forward engineering challenge.

Thus. . . my GUESS is that we get an announcement for additional equipment orders for 8.5G high throughput lines.

I'm hoping we catch wend of the equipment orders being expedited. First the extra 30K sheets at Guangzhou moved up to ASAP status with Q4 2021 target. 2nd adding another 90K 8.5G sheets with an aggressive installation timeline of Q2 2022 would be super. I'm guessing Paju because we know they already have the floor space. There was that POLED line announcement a while back which seemed to hint that they aren't reserving the area previously intended for the 10.5G glass.

So, my hopeful capacity summary:
  • Current 70k Paju 60K Guangzhou = 130K monthly 8.5G sheets -- 715,000 m^2 per month
  • Hopeful Q4 2021 70K Paju 90K Guangzhou = 160K monthly 8.5G sheets -- +165,000 m^2 per month
  • Hopeful Q2 2022 160K Paju; 90K Gungzhou = 250K monthly 8.5G sheets -- +495,00 m^2 per month

Additional 8.5G expansion can happen in 2023 and then move to a structurally simpler OVJP process at 10.5g glass at 45K sheets monthly using a fully phosphorescent RGB system in 2024.
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