MICROLED DISPLAYS - MARKET, INDUSTRY AND TECHNOLOGY TRENDS 2021 Market & Technology Report - August 2021 Strong momentum for MicroLED with progress on all fronts. Cost is the biggest challenge, but Apple and Samsung are carving paths toward the consumer. WHAT’S NEW A STRONG MOMENTUM: HAS MICROLED REACHED ESCAPE VELOCITY? • Recent events and trends in The current display industry environment is LCD or OLED didn’t take off until HVM technology and the competitive favorable to microLED: China won the LCD war, equipment became available. Equipment makers landscape and the industry is turning its focus to technologies are now offering microLED-dedicated tools, and, • Die size and cost roadmaps that deliver differentiation and high margins. although hindered by a lack of standardization • In-depth analyses of the microLED Helped by a Covid-driven demand boost, it has in processes, some are developing one-stop TV market: B2B vs. B2C, miniLED swung back to profit and is generating cash to fund solutions, including transfer, inspection, and direct view LED display vs. new technologies. While the LCD business model repair. microLED TVs needs high-volume commodity products to absorb • Display drivers and architectures: Mass transfer is no longer considered a TFT, microdrivers and chiplets huge fab costs and make money on premium fundamental roadblock by most players. Many • Updated analysis of the microLED products, microLED could seed CapEx-light issues remain, but the industry now sees a manufacturing and equipment operations focused on serving premium markets. clearer runway. Commercial tools from ASMPT, emerging ecosystem: requirements, Apple put microLED on the map when it acquired Toray, Coherent/3D Micromac using different challenges, strategies, competitive Luxvue. Display makers were initially skeptical processes are accelerating development. More landscape but now believe that, while challenging, microLED are coming from TDK, V-Technology, Besi, KEY FEATURES displays might be credible contenders in some Bolite/Contrel, etc. • Technology status: efficiency, applications. As a result, money and resources Samsung and Vuzix (with JB Display) are transfer, driving, QNED, etc. are flowing into microLED, fueling a virtuous introducing the first commercial µLED products • Process flows circle with faster developments, and improving in 2021. They won’t yet move the needle of the • Manufacturing, equipment prospects that are attracting further investments. display industry but are positive developments. • Competitive landscape, key players • Intellectual property trends Has microLED display industry reached escape velocity? • Supply chain readiness, Products! manufacturing, and equipment ecosystems • Cost aspects, roadmaps Limited resources More resources • MicroLED display applications: ($, people) ($, people) Strengths, weaknesses, MicroLED specific Small / slow manufacturing and opportunities, and threats (SWOT) No incentive for improvement development tools equipment makers Acceleration of analysis, roadmap and forecast to develop tools development cycles for TVs, smartphones, wearables, automotive, augmented reality, Roadblocks laptops, tablets, and monitors Muddy and remain: performance, More effective underwhelming solutions to • MicroLED display panel and wafer prospects cost, supply Improving chain Prospects challenges demand forecast No convergence in Improving solutions and shared performance industry goals, roadmaps and cost PAST NOW? (Yole Développement, August 2021) APPLE VS. SAMSUNG: EARLY SUPPLY CHAIN MOVES INDICATE DIFFERENT PATHS TO REDUCE COST Strong momentum does not guarantee success: The cost of LCD decreased by a factor of 300, many technical and supply chain challenges could from $30k/m2 to $100/m2 in 25 years. However, still derail microLED. Many solutions look great LCD started from a blank canvas. Cost reduction on paper, but real-life process integration in a opportunities lie across the board: materials, high-volume manufacturing environment is much equipment, processes, etc. For LCD, the bulk of more challenging. Cost is the #1 obstacle and is the decrease was achieved by generation scaling. still 20x to 50x too high for consumer products. MicroLED, on the other hand, exists at the MICROLED DISPLAYS - MARKET, INDUSTRY AND TECHNOLOGY TRENDS 2021 Ref. YINTR21162 intersection of the mature Semiconductor, LED, LCD vs. microLED cost reduction paths and Flat Panel Display industries. Few contributors ~$30k/m2 present 300x cost reduction opportunities, but 1000 in many cases, µLED hasn’t yet leveraged the Gen 3 technologies and wafer processing equipment that MicroLED: Gen 4 50x in 10 years ?? could help deliver significant improvements. Gen 6 Apple clearly was aware of that: the company ) is driving its supply chain to a 200 mm wafer U A ( ? to unlock the fantastic efficiency of the mature 100 Gen 8+ e s Semi manufacturing philosophy that has remained a e r untapped by the LED industry. This risky and c LCD: e d 300x in 25 years initially costly bet could pay off, giving the company Gen 10 t s a unique advantage when it comes to addressing the o c e smartphone market, which requires very small and v i 10 t low-cost yet high-performance chips. a l e Gen 10.5 R Most other players are, for now, on the opposite path, building knowledge and reducing cost on ~$100/m2 existing 4” LED fabs while waiting for more clarity for the prospect of microLED. This approach could 1 work for first products (B2B TV, etc.) or small 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 displays but likely will not deliver the small die size and performance required for HVM of consumer (Yole Développement, August 2021) TVs or smartphones. PRODUCT ROADMAPS ARE COMING INTO FOCUS, AND THE SUPPLY CHAIN IS SHAPING UP Many companies have some pieces of the microLED restrictions that would prevent fully national supply puzzle, but none has all of them. It is unlikely that chains: microLED could become a supply-chain- any player will fully integrate all elements. Each will decoupling poster child. remain mostly focused on its core expertise: panel The traditional, vertically integrated display panel makers will source Chips-on-Wafer or binned, business model requires multi-billion-dollar fabs Chips-on-Carrier from LED makers. This leads to that few can afford. With microLED, the CapEx is more margin stacking. distributed among different industries. This leads Collaborations are increasingly falling along to a more complex but potentially more agile nationalist lines: Chinese companies BOE, CSOT, supply chain, opening the door to new entrants. Visionox, Huawei, etc., are collaborating with the If it desires, Apple could ultimately control a major domestic LED makers Sanan, HC-Semitek, fabless µLED display supply chain, independent of Nationstar, etc. At the same time, Taiwan leverages traditional panel makers and with multiple suppliers its strong LED, Display, and Semi ecosystem at each critical step. with AUO, Ennostar, and Playnitride increasing For most applications, we are struggling to collaborations. deliver a cost model scenario where microLED is Is the trend driven by the COVID crisis what significantly cheaper than OLED, let alone LCD. prevents teams from crossing borders? There Strong differentiation is therefore essential. This are no major technology or equipment access is easier in segments with no strong incumbents. Adoption in Augmented Reality (AR) will take off 2021-2027+ microLED display application timelines from 2023, but AR is still searching for a strong use case for high-volume consumer adoption. Automotive is compelling for microLED, but long Flagship Flagship design and qualification cycles are pushing initial Smartwatch Smartphone Consumer TV adoption beyond 2025. If Apple’s current pilot effort succeeds, smartwatch will be the first high-volume consumer application with a product introduction anticipated for 2024. TV and smartphone are Automotive Consumer AR more difficult nuts to crack as OLED is a moving target, improving continually in both cost and performance. Samsung’s commitment to TV is encouraging. The first real consumer products B2B Signage Enterprise AR & Luxury TV (Monochrome) could emerge from 2025. Smartphone remains the most challenging application, but Apple’s ambitious 2021 2022 2024 2025 2027 microLED technology choices bring new hope. Detailed forecasts of display and epiwafer volumes (Yole Développement, August 2021) are presented in the report. MARKET & TECHNOLOGY REPORT REPORT OBJECTIVES Understand the status of microLED technology: • Recent progress • What are the remaining pinch points? • Cost aspects, roadmaps Competitive landscape and supply chain: • Understand the microLED ecosystem: LED makers, equipment providers, panel makers, OEMs: key AUTHORS players, who does what, who works with whom? Eric Virey is a daily contributor to the • Scenarios for microLED display supply chain: OEMs, display makers, equipment makers, start-ups, development of the Display activity at and technology providers Yole, with a large collection of market and • Impact on the display supply chain technology reports on display technologies, Which applications could microLED displays address and when? Quantum Dots, MicroLEDs, TFT backplanes • Detailed analyses and roadmaps for major display applications as well as multiple custom consulting projects: • Cost analysis business strategy, identification of investments or acquisition targets, due diligences (buy/ COMPANIES CITED IN THE REPORT (non exhaustive list)