BOE's flexible AMOLED screen production capacity has increased significantly. Will Apple abandon Samsung and turn to BOE?

Following the mass production of BOE's 6th-generation flexible AMOLED production line in Chengdu on October 26, 2017, BOE's 6th-generation flexible AMOLED production line in Mianyang (B11 plant) started mass production and shipment on July 15, 2019, which is another important milestone for BOE in the field of flexible display. Apple's upcoming new generation iPhone (let's call it iPhone 11) may use the AMOLED screen of BOE's B11 plant.

BOE's 6th-generation flexible AMOLED production line in Mianyang starts mass production

According to reports, BOE's Mianyang 6th generation flexible AMOLED production line is the world's leading touch-integrated flexible display production line. By adopting a touch-integrated solution, it can better reduce the thickness of the module and make the flexible display thinner and lighter. At the same time, BOE applies mature evaporation technology and flexible packaging technology to the Mianyang flexible production line, bringing higher-quality full-screen mobile phones, foldable mobile phones, foldable notebooks and other flexible display products to global users.

▲BOE Mianyang 6th generation flexible AMOLED production line mass production and delivery ceremony

On the day of the delivery event, the first 6.47-inch water-drop curved flexible screen mass-produced by BOE's Mianyang 6th-generation flexible AMOLED production line was unveiled on site. Its more colorful and clearer high-quality picture performance attracted much attention.

▲BOE 6.47-inch water drop curved flexible screen

It is reported that Huawei's Mate 30 series may use this screen. There is also news that Apple's upcoming iPhone 11 may also use this screen.

BOE's flexible AMOLED screen production capacity has increased significantly

According to data, the Chengdu sixth-generation flexible AMOLED production line, which has been put into mass production, has an investment of RMB 46.5 billion and a designed production capacity of 48,000 glass substrates per month. After full production, it can provide flexible AMOLED screens for about 70 million mobile phones each year.

The investment amount and planned production capacity of BOE's Mianyang 6th-generation flexible AMOLED production line in mass production are basically the same as those of its Chengdu 6th-generation flexible AMOLED production line.

In other words, BOE currently has the capacity to provide approximately 140 million flexible AMOLED screens for mobile phones every year.

In addition, BOE also announced that it would build a sixth-generation flexible AMOLED production line in Chongqing and Fuzhou, with an investment of 46.5 billion yuan for each production line and a designed production capacity of 48,000 glass substrates per month. Among them, the sixth-generation flexible AMOLED production line in Chongqing (B12 plant) is expected to be put into production in 2021.

At present, BOE's total investment in flexible AMOLED production lines has reached 186 billion yuan, with a designed monthly production capacity of 192,000 pieces. With the gradual mass production of these four flexible AMOLED production lines, BOE's competitiveness in the flexible AMOLED market will be further enhanced.

Data from market research firm Stone Partners shows that next year the penetration rate of flexible AMOLED displays used by major global smartphone brands will increase to 21%, which means it will jump to more than one-fifth of the market.

Looking specifically at the world's top three mobile phone brands, Samsung's flexible screen mobile phone penetration rate will increase from 19% in 2019 to 24%, Huawei will increase from 11% to 18%, and Apple will increase significantly from 33% to 65%. In addition, Chinese brands such as OPPO, vivo, and Xiaomi will also expand shipments of flexible mobile phones.

Will BOE's B11/B12 production lines mainly supply Apple?

As early as 2017, after BOE's Chengdu 6th generation flexible AMOLED production line went into mass production, news spread in the industry that Apple would adopt BOE's AMOLED screens.

Subsequently, Korean media also reported that the Mianyang 6th generation flexible AMOLED production line and the Chongqing 6th generation flexible AMOLED production line (B11 and B12 plants) will become Apple's exclusive flexible AMOLED production lines. Among them, 70% of the production capacity of the B11 plant will be invested in the production of flexible AMOLED, and the remaining 30% will be used to produce foldable panels; while the B12 plant will have a 50% share of flexible AMOLED and foldable panels.

According to a report by Korean media DDaily on October 23 last year, a person from a domestic company that supplies OLED equipment to BOE said that BOE has verbally agreed to supply B11 OLED to Apple. B11 is BOE's second 6th generation curved OLED factory. However, the person also mentioned that the two parties have only verbally agreed at present. If the conditions are met and the future yield and quality are improved, they will be able to secure the supply contract.

In October 2018, BOE's flexible AMOLED screen was successfully adopted for the first time in Huawei's flagship Mate 20 Pro series.

Later, Korean media reported that a person from a domestic company that supplies OLED equipment to BOE said that BOE has verbally agreed to supply B11 OLED to Apple. The person also mentioned that the two parties have only verbally agreed at present, and if the conditions are met and the yield and quality are improved in the future, they will be able to win the supply contract.

In February this year, news came from the industry that BOE had obtained the qualification as Apple's AMOLED screen supplier.

In order to use BOE's screens, Apple is willing to pay Samsung $770 million in liquidated damages?

Yesterday, BOE announced that its sixth-generation flexible AMOLED production line in Mianyang (Factory B11) had officially entered mass production and shipment. At the same time, rumors broke out in the industry that Apple had canceled orders for more than 100 million AMOLED screens supplied exclusively by Samsung. Samsung claimed compensation for production costs, and Apple paid a total of more than US$770 million.

However, it is still unclear why Apple canceled the order. Some sources said it was due to poor iPhone sales, while others said it was due to Japan's recent announcement of restrictions on the export of key raw materials to South Korea, and Apple wanted to ensure supply. Others speculated that Apple claimed that Samsung had problems with its raw material supply and wanted to take advantage of the situation.

Samsung demanded a huge amount of liquidated damages from Apple due to the cancellation of the order, which further pushed Apple to consider getting rid of Samsung's restrictions and introducing more OLED screen suppliers in the future. Among them, BOE will become the main target.

Before the launch of iPhone X in 2017, all of Apple's iPhone models used LCD screens, which were mainly supplied by multiple suppliers such as LG, JDI, Samsung and Sharp.

However, starting with iPhone X, Apple introduced AMOLED screens. Since Samsung had a very obvious leading advantage in AMOLED screens at the time, Samsung also became Apple's exclusive supplier.

However, Apple has always adopted a dual-supplier strategy for core components. If Apple is mainly controlled by a single supplier, it will often be unable to flexibly adjust supply, production capacity, price and agreements.

Apple's cancellation of its Samsung order may be to implement the multi-supplier strategy it has always adhered to.

According to reports, Apple will introduce a new AMOLED screen supplier for the iPhone 11 products, and this supplier is BOE.

Many industry insiders said that this means that the new iPhone 11 to be released in the second half of this year may use BOE's AMOLED panel products.

BOE challenges Samsung with its own strength

According to information disclosed by BOE, in 2018, BOE's display shipments increased by 24% year-on-year, ranking first in the world, and the total area of ​​shipped panels increased by 45%. In terms of LCD TV panels, BOE shipped 54.3 million units, ranking first in the world, while LGD and Innolux ranked second and third with shipments of 48.6 million and 45.1 million units respectively.

Recently, the latest report released by the statistics agency IHS Markit pointed out that in 2019, BOE will surpass LG Display and become the world's number one FPD (flat-panel display) manufacturer.

In terms of patents, BOE applied for 9,585 patents in 2018, of which invention patents accounted for more than 90%. The cumulative number of available patents worldwide exceeded 70,000, covering the United States, South Korea, Europe, Japan and other regions. Among them, the number of US patent authorizations increased by 1,634 in 2018, an increase of 16% year-on-year, and the ranking rose to 17th.

According to data previously released by IHS, in the small and medium-sized AMOLED screen market for smartphones, Samsung shipped 422 million AMOLED screens in 2017, of which 150 million were flexible AMOLEDs. In comparison, LG only shipped about 1 million (500,000 flexible AMOLEDs), Visionox shipped only 3.3 million, and BOE, Tianma and Taiwan's AUO shipped less than 1 million.

Two years later, with the mass production of BOE's B11 and B12 plants, BOE now has the capacity to provide about 140 million mobile phone flexible AMOLED screens per year, which basically catches up with Samsung's mobile phone AMOLED screen production capacity in 2017. Although there is still a certain gap, it has been greatly narrowed.

It is worth mentioning that BOE B11 is the world's leading touch-integrated flexible display production line. By adopting a touch-integrated solution, it can better reduce the thickness of the module and make the flexible display thinner and lighter. It has reached the international leading level.