Samsung to Halt 40-inch LCD Production Line to Meet Apple's Upcoming OLED Demand

As Apple plans to introduce OLED iPhone soon, Samsung’s OLED panels will be used at the primary stage. In order to meet the OLED demand, Samsung is to shut down its L7 production line and replace it with OLED production ones by the end of December, 2016. The halt is expected to lead to short supply of 39.5- inch to 45-inch panels. Meanwhile, two leading Taiwanese panel manufacturers will directly benefit from the demand.

As Samsung used to process up to 150,000 pieces of glass substrates each month at L7-1 line, the halt of production line will cause short supply in 40-inch TV display.

The 7-1 production line was a joint construction between Samsung and Sony. Started from 2Q05, the production line has been operating for more than 10 years. Each of Samsung’s glass substrate produces 8 pieces of display for 40-inch TVs. When taking into account of 95% utilization rate, the market will be short of 1.2 million pieces of 40-inch TV displays each month. Samsung is to sell the equipment of L7-1 line as it talks to buyers from India and China.

Decreasing demand in 32-inch TV displays

Samsung will use L7-1 plant as 6th OLED line in the future, scheduling at 2Q17 for OLED production, said Wang. The primary production ranges from 20,000 to 30,000 pieces. The other production line L7-2 is equally shared by LCD monitors and TV. Therefore, Samsung’s halt of 40-inch production line will lead to tight supply of 39-inch to 43-inch displays. Other display manufacturers will naturally benefit from the demand, including AUO that manufactures 43-inch display, LG Display that mainly produces 39.5-inch and InnoLux’s 45-inch production.

As demand of global LCD TVs shifts to large size products and the pace is accelerating, it’s projected that the TV size will grow another 1.5 inch to 2 inch at 40 inch to 42 inch, said Ya-Cin Li, vice president of ∑ intel. The demand of displays under 32-inch dropped as the market turned to large size TVs, including 40-inch displays and larger products. The demand of 40-inch displays saw significant growth.

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