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Samsung To Keep Tight Grip On OLED Display Supply Near Term

Display manufacturers are rapidly building production capacity to supply OLED screens for smartphones, such as Samsung's Galaxy Note 7. (Samsung)

Display manufacturers are rapidly building production capacity to supply OLED screen smartphones. But much of the increased capacity will go to Samsung smartphones, including a possible handset with a foldable display late next year.

Display makers, including Samsung and LG Display (LPL), should have enough capacity to supply about 40% of the estimated 1.5 billion smartphones to be shipped in 2017, Susquehanna Financial Group analyst Mehdi Hosseini said in a research report Wednesday.


IBD'S TAKE: Chip and display-gear maker Applied Materials recently hit a 16-year high thanks to growth areas like OLED display equipment. Read the article titled, "Applied Materials Makes 'Compelling Case' For Growth In Chip Gear Sector."


Samsung and LG Display are on track to increase annual OLED manufacturing capacity to 750 million smartphone screens by year-end 2017, up from the current 360 million. But because of manufacturing yield losses and inefficiencies, the effective (or net) capacity will be closer to 600 million by year-end 2017, Hosseini said.

Of that, Samsung will have about 95% market share to LG's 5%, Hosseini said.

Much of the capacity increase will be used to meet Samsung's internal smartphone demands, including a folding-screen smartphone in the second of half 2017, he said. Apple (AAPL) and Chinese smartphone makers will get about 40% to 45% of the increase in capacity, Hosseini said.

Apple is expected to use an OLED display in at least some versions of the iPhone 8, set for release in late 2017.

Samsung and LG Display are both working with chip equipment makers Applied Materials (AMAT) and Kateeva to improve their OLED manufacturing processes.

OLED screens are thinner and more power efficient that the LCD screens in use on smartphones today. They also boast a richer color gamut and deeper blacks. Plus, OLED screens are flexible, making it possible to use curved screens.

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