Taiwan's panel industry is being squeezed between China and South Korea. Can this new technology help it turn the tide?

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Taiwan has been cultivating the panel industry for 20 years, and is at the forefront of the world in terms of technology, shipments, and size diversity. However, in recent years, Korean manufacturers have turned to OLED technology with their technological and financial advantages; Chinese manufacturers have increased their LCD production capacity, and the competitive threat to Taiwanese panel manufacturers has intensified. Caught between Chinese and Korean manufacturers, they urgently need to break through the siege and find a new way out. ITRI and some manufacturers are committed to the research and development of the next generation of display technology, Micro LED. Can it become a new antidote?

Japanese and Korean manufacturers are working hard to seize the OLED technology

Samsung and Apple's new flagship phones have adopted OLED panels one after another. With the efforts of Korean manufacturers Samsung Display (SDC) and LG Display (LGD), the production capacity of OLED panels continues to grow, and it is likely to replace LCD. Samsung and LG even closed their TFT-LCD production lines and invested heavily in OLED and quantum dot technologies.

Japan has put all its national efforts into this. In addition to the public-private fund Industrial Innovation Organization (INCJ) investing 75 billion yen (about NT$21 billion) in Japan Display (JDI) to develop OLED, Japan Display intends to merge JDI with JOLED, which has integrated the OLED R&D technology of Sony and Panasonic, to form an alliance to fight against South Korea. Sharp is also accelerating its catch-up with the help of Foxconn.

In Taiwan, Innolux recently confirmed that it will have more cooperation with Sharp on OLED panels, and AUO continues to carry out small-scale mass production of AMOLED. However, Taiwanese manufacturers are obviously much less vocal in the development of OLED, and their firepower is concentrated on small niche panels for wearable devices such as smart watches.

The two major Korean manufacturers have deployed heavy forces in OLED, woven a tight patent network, and snatched equipment to limit production capacity. LCD technology is already quite mature, and there is little room for improvement. In fact, Taiwanese manufacturers have not much room for retreat. On the other hand, from the adoption of LCD backlight modules to OLED self-luminous sources, some LCD key component manufacturers are also facing a critical moment of transformation. Seeing that many opportunities are gradually lost, some people are looking to the next generation of display technology - "Micro LED".

Why is Micro LED considered the next generation display technology?

The principle of Micro LED display technology is to move micron-level RGB three-color Micro LEDs onto a substrate to form Micro LED displays of various sizes. In simple terms, it is a bit like a miniature outdoor LED display billboard, where each Micro LED can be regarded as a pixel and is driven and lit individually.

From a technical perspective, Micro LED has reached the limitations that traditional LCD and OLED panels are difficult to break through. For LCD, an additional backlight module is required, which is thicker and technically difficult to achieve flexibility. OLED has improved the disadvantage of panel thickness and can be flexible, but to save power, high-brightness display and white screen must be reduced, and visual performance is affected. In addition, the highest-end LCD can reach 800 PPI, but the current AMOLED panel is still below 600 PPI, while Micro LED can reach 1900 PPI. Although Micro LED is not as flexible as OLED, each pixel can be driven independently, which is more power-saving and faster than LCD and OLED, and has the advantages of high brightness and high color saturation.

Comparison of LCD, OLED, and Micro LED features (Source: TrendForce LEDinside)

Because Micro LED uses different LED chip sizes, mass transfer methods, and driving solutions in different applications, it is difficult to estimate the market size that can be created. However, if we estimate the scale of fully replacing existing LCD display components including backlight modules, liquid crystals, polarizers, etc., TrendForce LED Research (LEDinside) estimates that the potential market size of Micro LED in the future can reach approximately US$30 billion to US$40 billion.

Taiwan's new opportunity to develop Micro LED

Although Micro LED is still in its early stages of development, it has already attracted investment from Sony, Apple, and global display supply chain manufacturers. Apple acquired Micro LED display technology company LuxVue in mid-2014, and its layout was quite early. LuxVue, which started in Santa Clara, California, actually has deep roots in Taiwan. In addition to registering a company in Taiwan, before Apple acquired LuxVue, panel giant AUO, IC design company MediaTek, and Himax, which specializes in driver ICs, all held shares in LuxVue.

Global manufacturers currently investing in Micro LED development (Source: TrendForce LEDinside)

Micro LED technology covers multiple industries. Taiwan, which is known for its professional electronic manufacturing services, was the cradle of LuxVue's Micro LED development and is still an excellent place to develop Micro LED technology. Micro LED involves technologies such as mass transfer, micro assembly, and substrate bonding, and covers industries such as LED, display, and semiconductors, all of which Taiwan is involved in.

This is a battle that cannot be fought alone

Taiwanese manufacturers have not missed the opportunity to develop Micro LED. In addition to semiconductor startups such as PlayNitride and Mikro Mesa, which focus on the most critical mass transfer technology of Micro LED, major LED manufacturers including Epistar and Lextar, as well as panel manufacturers such as AUO and Innolux, have also begun to invest in related research and development. Macronix, Himax, Raydisplay and Novatek have laid out Micro LED Micro LED driver ICs. The Industrial Technology Research Institute is actively promoting micro-assembly technology, also starting with Micro LED.

On the other hand, because Micro LED technology involves a wide range of issues and a long supply chain, it cannot be achieved by a single industry or a single manufacturer. Establishing a strategic alliance is exactly what Taiwan needs to do in order to develop Micro LED. Micro LED brings about a comprehensive transfer of industries, from miniaturized equipment to the raw materials used to bond Micro LED to substrates. Everything needs to be refilled from beginning to end. These are opportunities and challenges. If there is no strategic alliance between manufacturers to understand each other's needs, it is very easy to become a blind man groping in the dark, increase communication costs, and even take a longer R&D time.

Considering the current technical bottlenecks and yield issues of Micro LED's mass transfer, as well as the fact that the cost of Micro LED is 3 to 4 times higher than that of general display technology, it is estimated that Micro LED will take another 3 to 5 years to be commercialized. The biggest challenge is how manufacturers can work together to survive the long technology research and development period.

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