Price Gap Between OLED And LCD Displays Closing
November 3, 2017 by Dave Haynes
Via Display Daily
OLED displays have tended to generate a couple of uniform reactions from onlookers:1) they look amazing and 2) they’re amazingly expensive.
The latter is changing, according to research firm IHS Markit, which says the manufacturing cost gap between OLED displays and LCD displays is closing.
IHS says its OLED Display Cost Model analysis estimates the total manufacturing cost of a 55-inch OLED ultra-high definition (UHD) TV panel — at the larger end for OLED TVs — was at $582 per unit in the second quarter of 2017, a 55 percent drop from when it was first introduced in the first quarter of 2015. The cost is expected to decline further to $242 by the first quarter of 2021, IHS Markit says.
The manufacturing cost of a 55-inch OLED UHD TV panel has narrowed to 2.5 times that of an LCD TV panel with the same specifications, compared to 4.3 times back in the first quarter of 2015.
“Historically, a new technology takes off when the cost gap between a dominant technology and a new technology gets narrower,” said Jimmy Kim, principal analyst for display materials at IHS Markit. “The narrower gap in the manufacturing cost between the OLED and LCD panel will help the expansion of OLED TVs.”
However, it is not just the material that determines the cost gap. In fact, when the 55-inch UHD OLED TV panel costs were 2.5 times more than LCD TV panel, the gap in the material costs was just 1.7 times. Factors other than direct material costs, such as production yield, utilization rate, depreciation expenses and substrate size, do actually matter, IHS Markit said.
The total manufacturing cost difference will be reduced to 1.8 times from the current 2.5 times, when the yield is increased to a level similar to that of LCD panels. “However, due to the depreciation cost of OLED, there are limitations in cost reduction from just improving yield,” Kim said. “When the depreciation is completed, a 31 percent reduction in cost can be expected from now.”
The research relates to TVs, not commercial display panels, so it’s not absolutely clear the same price gap is happening with OLEDs touted for digital signage. But it’s reasonable to assume that.