Since entering 2024, the micro LED display market has been "weird": it has changed the previous general trend of concerted efforts at home and abroad, and has entered a new moment of "increasing differentiation".
In this regard, some people in the industry believe that this is the industry competition to complete the first half of the "technology and capacity reserves", and increasingly in the second half of the "scale and marketization" development of the signal - in this transition, some self-identified "competitiveness" limited enterprises began to withdraw, or slow down the pace, reduce investment, is a sign of "start-up clearing".
Leaving shows that the future will be better
In January, according to ** reports, China's Taiwan LED upstream enterprise Ennostar will be priced at NT$6700 million yuan ** Zhunan plant to Polaris Biomedical Co., Ltd. *** It is reported that the Zhunan plant was originally planned to be used for micro LED capacity expansion. Ennostar uses three reasons: "accelerating the integration between group companies, revitalizing assets and optimizing the financial structure". In the future, Ennostar will concentrate the vacant space through its subsidiary, Epistar, as a micro LED factory area - no need to build a new plant, only need to optimize equipment, and save capital expenditure to achieve "micro LED expansion".
In this regard, it is a striking fact that the "potential size" of the expansion by optimizing the existing plant space is obviously not as large as the previous new plant. What's more, the new plant does not hinder the existing plant to optimize the space to expand the production of new products. Ennostar's move suggests that it is more conservative, at least in the short term, when it comes to micro LED expansion – a sign of a deceleration.
On February 28, Osram announced the unexpected cancellation of an important Micro LED project. The construction of its 8-inch LED wafer fab in Malaysia may see significant changes. The plant, which had previously planned to invest $1 billion, was a relatively large project. Osram said that after a preliminary assessment, the company expects to make asset impairments of 6-900 million euros on Micro LED-related assets in the first quarter of 2024 and reevaluate the Micro LED strategy.
Changes in OSRAM's Micro LED business are not simply a matter of optimization. As a direct result of the change, there was a loss of 600 million to 900 million euros in asset valuation. From this, you can imagine the "difficulties" behind its Micro LED business.
At the beginning of March, it was reported that Apple had halted plans to introduce Micro LEDs for the Apple Watch. At the same time, Ming-Chi Kuo investigated that Apple has laid off most of the MicroLED development team. Affected by this, LG Display, the manufacturer of Apple's micro LED display panels, also had to start reassigning relevant personnel
LG Display's Micro LED Development Working Group within its Strategic Account (SC) division recently held an information conference and announced that it would only accept applications from "those who are willing to take a leave of absence." In the future, only part of the team will continue to work on Micro LED development, and the rest will be transferred to mass production facilities. According to the analysis, this means that LGD's Micro LED R&D department has entered a layoff time.
It is worth mentioning that Taiwan's micro LED industry mentioned above has close cooperation with Apple and Korean display companies; The OSRAM Malaysia project is the upstream ** chain of the LGD-Apple project.
Based on the above related events, it can be seen that the global market Micro LED has experienced a small "trough" in R&D, manufacturing and application at the beginning of 2024. According to the study, there are three reasons for this.
The reason for the trough of the international industry is more due to competition
Why do Apple, LGD, Osram, and Ennostar either brake or slow down on Micro LED? One of the main reasons is that the cost of preparation and application of Micro LED products is too high, which hinders the rapid implementation of the market.
Micro LED applications are the "most difficult" to land in small size applications such as Apple Watch. Compared with the advantages of silicon-based Micro LED in XR reality and the reality that Micro LED large-screen direct display products have been launched rapidly, the "difficulty and cost of small and medium-sized direct display micro LED panels are not reduced", but the value increase is not clear compared with LCD OLED. This may be the reason why Apple has abandoned the effort to "use micro LED displays in smart watches since 2014".
It is expected that it will enter mass production from the second half of 2024 to 2025 (author's note: it has mass production capacity), and it is currently planned that between 2026 and 2027, there will be micro LED technology to enter the application mass production stage (author's note: with large-scale customers). It can be seen that it will take time to further run in from the formation of a large-scale consumer market for micro LED.
At the same time, another reason for the discouragement of some participants is that from the fourth quarter of 2022 to the end of 2023, the demand in the international consumer market, especially the consumer electronics market, has plummeted. This has significantly impacted the revenue growth of companies such as Apple. In this context, it is inevitable that some enterprises that value short-term financial statements will optimize their investment projects. Apple, for example, has just announced that it is abandoning its smart new energy vehicle business, which has invested tens of billions of dollars.
Finally, for this round of "headwinds" in the micro LED international investment community, the fundamental reason is that "the opponent is too strong": Apple's offline in new energy vehicles is actually more because it feels that the gap with the market leader is too large, and it has made a wise choice. In the future, Apple may pay more attention to the research and development of in-vehicle electronic experience components such as intelligent driving. Similarly, in the micro LED market, the scale of investment and comprehensive strength of the leaders are also intimidating
For example, according to data from Lotu Technology (RUNTO), in 2023, the global LED display market size will be 7.1 billion US dollars, of which the scale of small-pitch LEDs (including micro-pitch) will be 33600 million US dollars, accounting for 47 percent of the total market3%。(Author's note: mainly refers to the market demand for large screen direct display).
Especially in terms of investment scale, Zheng Haiyan of Lotu Technology emphasized that from 2022 to 2023, the number of typical projects related to project signing, construction start, capping, completion and commissioning in the field of mini micro LED will reach 138, with an investment scale of nearly 180 billion yuan. In terms of technology development, there are more than 160 micro LED research units around the world, of which more than 60 are located in China. (Author's note: including all micro LED and other emerging display industry chain investment and research and development) - the proportion of domestic innovation institutions is significantly higher than that of foreign countries, and a large number of foreign innovation institutions are universities or professional research institutions, rather than market-oriented enterprises.
According to the latest update information on the micro LED market released by DSCC Research and Consulting, it is expected that by 2028, the size of the micro LED display market (author's note: mainly refers to emerging applications such as smart watches, AR glasses and automotive displays) will reach 14$600 million. Among them, between 2020 and 2026, China is expected to account for 85% of Micro OLED equipment spending. —This is an absolutely dominant proportion of the production capacity layout structure.
The industry believes that the Chinese market, especially the huge investment in micro LED research and development, supporting and investment of enterprises in mainland China, and the potential supply and demand scale advantages, are one of the reasons for suppressing the confidence of other competitive regions in the world, including Taiwan, China. Moreover, it may be the "key winning factor" in the long-term competition in the market.
Optimistic about the micro LED trend has not changed, and the peripheral adjustment is more of a positive signal
At the beginning of 2024, the adjustment of several large enterprises in the micro LED international market will definitely be "negative news" purely from the internal perspective of these companies. However, if you look at the micro LED industry, it may be just "good news": because the structure of the global industrial layout is becoming clearer and clearer.
The weak quit"! Industry insiders describe this round of adjustment of international companies in the micro LED industry. This is actually equivalent to the affirmation of the strength and achievements of the strong, indicating that the strong are closer to the node of large-scale popularization and application of Micro LED.
After all, the development of Micro LED is not only rooted in the LED industry chain (in this regard, China's mainland has an absolute advantage in production capacity), but also rooted in the semiconductor display industry chain (LCD in China's mainland accounts for 7 percent of the world's total, OLED accounts for nearly half, and silicon-based micro display investment accounts for more than 7 percent), but also rooted in the consumer electronics manufacturing chain (China's mainland still leads the global proportion) - therefore, the closer Micro LED is to the market, the more it is necessary to consider the "industrial chain", "chain", "Demand", the more we need to be more competitive in the word "scale". This is precisely the process of "the strong gradually coming to the fore" and "the weak gradually withdrawing from the stage".
To sum up, since the beginning of 2024, a little headwind in the micro LED industry in the international market has not changed the general trend of the industry, but has some meaning that "the overall situation is about to be finalized". This is just like Apple's withdrawal from car manufacturing, which itself is an affirmation that the "new car" force has grown to a considerable height!