AMOLED now has all it takes to become the premier display technology of the future. In addition to being more power-efficient and capable of outputting deeper colors, AMOLED panels are officially cheaper to produce than LCD ones. Market researcher firm IHS Technology claims that production costs of AMOLED and LCD panels in the first quarter have gone down to $14.3 and $14.6, respectively, based on the cost for a 5-inch Full-HD Smartphone. Prices have fallen from $17.1 (AMOLED) and $15.7 (LCD) in the fourth quarter of last year. It seems like a legitimate possibility that AMOLED panels will begin replacing LCD ones, not just on high-end smartphones, but on mid-range and low-end models alike.
Possible explanations for the price shift include high rate of operation, wider range of customers, and end of depreciation of production lines. IHS pointed out that Samsung Display, the biggest player in the field, has quickly expanded production of small and medium-sized AMOLED panels since the second half of last year. It also secured major Chinese smartphone makers (such as Meizu and Oppo) as customers, which let it increase operation rate at up to 95%. As spending on running production facilities is fixed, production costs can be reduced if their output is increased by boosting the rate of operation. Samsung Display also managed to stabilize yields during the early production phase, which has had positive impact.
With the price of admission falling down, Chinese smartphone makers use AMOLED panels not only for premium products, but also for mid-range models. Industry analysts predict that manufacturers will quickly replace LCD panels with AMOLED ones, now that production costs have become similar. Samsung Display is preparing its facilities to ramp up production, which means AMOLED production costs will keep falling. Additionally, increased demand will drive competition, as fabless semiconductor manufacturing businesses that have secured technologies to design AMOLED screens will become more active.
Recently, Samsung Display made a $325.73 million (400 billion won) investment in its flexible OLED panel manufacturing lines in Tangjeong, South Korea. Its total flexible OLED panel production capabilities will be increased from the current 39,000 sheets/mo. to 90,000 sheets/mo. Industry watchers speculate that Samsung Display is gearing up to meet demand for flexible OLED panels by Apple. Sources such as Japanese newspaper Nikkei claim that Apple is looking to switch to OLED technology for its iPhones and iPads as early as next year, and is close to signing supply contracts with Samsung and LG's display divisions. With prices set to fall even lower, there hasn't been a better moment for the Cupertino gang to jump on the OLED train.