The gap between supply and demand of OLED metal masks reaches 31%, and domestic manufacturers still need time to achieve large-scale mass production

In recent years, as the production capacity of domestic panel manufacturers has been gradually released, the OLED industry is in a period of rapid growth, driving the continuous increase in demand in the upstream material market. The market size of high-precision metal mask plates (FMM), as consumable core components required in the production of OLED panels, has also grown rapidly.

However, the current FMM market is basically monopolized by Japan's DNP and TOPPAN, and domestic manufacturers are currently in the sample verification stage due to their late layout and cannot yet achieve large-scale shipments. Against the backdrop of strong market demand and relatively insufficient production capacity, Qunzhi Consulting predicts that the global FMM supply-demand ratio will have a maximum gap of 31% in 2021. If FMM manufacturers' investment in expansion and yield improvement proceed smoothly, the FMM supply-demand relationship will be effectively eased by 2025.

The gap between supply and demand is as high as 31%

In recent years, with the continuous improvement of AMOLED product process technology, the improvement of AMOLED display panel performance and the reduction of costs have further enhanced the market competitiveness of AMOLED. Its application areas have also expanded from smartphones to televisions, cars, laptops and other fields, and its market share continues to increase.

According to Omdia data, the global AMOLED panel market size was approximately US$24.9 billion in 2019, accounting for approximately 23%. It is expected that by 2024, the AMOLED market size will reach US$53.7 billion, an increase of 115.66% from 2019, and the market share will also increase to 41%.

At present, in addition to the OLED production lines that have already been mass-produced, domestic panel manufacturers continue to accelerate the pace of building OLED production lines. BOE, TCL Huaxing, Visionox, Shenzhen Tianma and other companies have started multiple OLED production lines, lit up and put into production, and mass-produced and shipped. As the mass production progress of OLED panel production lines of relevant manufacturers accelerates, the demand for FMM will also increase in the future.

It is understood that FMM, as a consumable core component in OLED evaporation production, mainly deposits RGB organic matter and forms pixels during the OLED production process. The higher the resolution, the higher the PPI and the more pixels there are, which requires the FMM to have finer holes.

Thanks to the promotion of flexible OLED supply-side capacity, especially the continuous release of panel capacity in mainland China, the penetration rate of AMOLED in the smart terminal market has gradually increased, and the demand for FMM has also shown an upward trend. Qunzhi Consulting predicts that the global FMM market demand will be nearly 370,000 in 2021. With the improvement of FMM manufacturers' yield and the release of new capacity, the global FMM supply will be nearly 600,000 by 2025.

However, the current FMM market is mainly monopolized by Japanese companies. An industry insider told the author, "Currently, no FMM manufacturer in China has achieved mass production and shipment. Now only Japan's DNP can supply in large quantities, accounting for more than 90% of the market share, and TOPPAN has a small-scale supply. Other manufacturers basically do not supply."

"Since there are only two Japanese companies, DNP and TOPPAN, supplying the market globally, and DNP has signed a monopoly contract with Samsung, selling its most technologically advanced products to Samsung Display and occupying the vast majority of production capacity, domestic panel manufacturers can only purchase PPI or products with slightly lower quality," the person said further.

It is worth mentioning that with the expansion of OLED production capacity of related manufacturers, upstream materials such as FMM are in short supply, and the supply-demand gap is further widened. According to Qunzhi Consulting data, the global FMM supply-demand gap is expected to be as large as 31% in 2021. If FMM manufacturers' investment in capacity expansion and yield improvement go smoothly, it is expected that the FMM supply-demand relationship will be effectively alleviated by 2025.

Domestic manufacturers have not yet mass-produced

As a key core material for OLED display screens, FMM is still monopolized by foreign companies, becoming a "neck-blocking" material that restricts the development of my country's OLED display industry. To this end, China has also issued relevant policies to support the development of FMM and other materials, which have been included in the "Guidelines for Key Products and Services of Strategic Emerging Industries".

In addition to the policy level, FMM has huge domestic substitution opportunities, which has also attracted Ningbo Huancaixing, Anhui Junying Optoelectronics, Anhui Lide Materials, Shandong Aolai Electronics, Nanjing Gaoguang Semiconductor, Zhongling Technology and other manufacturers to compete for layout. And Huaxing Optoelectronics also jointly promoted the localization of the core FMM hollow metal mask for OLED with Suzhou Weige.

A person from a domestic FMM manufacturer told the author that "BOE, Huaxing Optoelectronics, Shenzhen Tianma and other domestic panel companies continue to invest in OLED panel production lines. With the release of production capacity of related production lines, it will definitely drive the market demand for upstream core consumables, especially high-precision metal mask plates. The market demand will definitely increase. We think that in the next 10 years, OLED panels will definitely be dominated by evaporation technology. For upstream core materials, there will be a large market space and market demand."

Despite the broad market prospects, domestic manufacturers have made slow progress due to the high threshold of FMM technology. An industry insider told the author, "Currently, only Ningbo Huancaixing and Anhui Junying Optoelectronics have made relatively fast progress. Currently, Ningbo Huancaixing is in the stage of sending samples, but its product performance does not meet the requirements of panel manufacturers. Anhui Junying Optoelectronics is in the stage of equipment installation and is expected to start trial production by the end of the year."

As for when domestic FMM products will be mass-produced and shipped, "it's hard to say, because the technology is too difficult." The above-mentioned manufacturer said that the technical difficulties mainly lie in three aspects. The first is that FMM has high requirements for graphic design and precision; the second is the technical process is difficult, because no one in China has successfully made G6 FMM products, so they have no idea whether their technical process is correct; the third is that the materials are unstable, resulting in uncontrollable production and processing.

Despite this, domestic companies continue to increase their efforts in product technology and have achieved good results. A relevant person in charge of Anhui Lide Materials previously told the author that "the company's current research and development focus is on the precision breakthrough of metal mask templates. The company has adopted a hybrid process independently developed to overcome the difficulty that traditional pure etching process and pure electroforming process cannot achieve precision breakthroughs, and has increased the opening from 30μm in the industry to 20μm, and the mass production physical PPI has increased to 423."

However, technological breakthroughs and mass production are still two different concepts. At present, it will take at least until 2023 for domestic FMM manufacturers to achieve large-scale supply. For this reason, Qunzhi Consulting said, "Looking at the demand and supply in mainland China alone, demand far exceeds supply, and there will be a continued imbalance in the next few years. As the production capacity of mainland flexible OLED panel factories G6 continues to be released, mainland G6 FMM will continue to be in a state of imbalance between supply and demand, and will need to continue to import from overseas."