Mobile Phone Display Makers Face More Competitive Field

Chinese display module makers look to increase their share of global mobile phone display shipments.

mobile displays and IHS

Global mobile phone display module shipments in 2015 are expected to rise just 4 percent year-over-year to reach 2 billion units, leading to even stronger competition among mobile phone display manufacturers, according to a report from IT analyst firm IHS.

The report noted that Chinese display module makers have resolved to increase their share of global mobile phone display shipments. In the third quarter of 2014, Chinese manufacturer BOE unseated Samsung Display to become the leading global mobile phone display module supplier.

Paul Gray, an analyst with IHS, told eWEEK that Chinese manufacturers are largely fighting on price at present.

"I am not convinced that there is any specific cost innovation or corner-cutting, Gray said. However, they have new fabs and are trying to break into the market with no name or reputation. Naturally they have to undercut to get a foothold. However, as they learn and execute then there is an opportunity to command better pricing."

The report noted that display module makers in China also intend to improve their market share in the high-end mobile phone display market. For example in 2014, BOE, Tianma and China Star attracted industry attention when they announced their G6 LTPS investment plans. In addition, Truly, a local traditional Chinese LC module maker, announced it is investing in G4 active-matrix organic light-emitting diode (AMOLED) manufacturing capabilities.

Reacting to lowered demand for handsets, OLED module makers have been aggressively promoting AMOLED products in China, but they still face competitive pricing pressure. For example, the average price for 5-inch HD AMOLED modules in China's open market, excluding cover glass and lamination cost, has fallen from $43 in the first quarter of 2014 to $25 in the Q1 2015. However, 5-inch HD display modules are widely used in handsets with high cost-performance (CP) value ratios, with retail prices that vary from $95 to $160.

With increased competition, low-end high-CP value handset prices are expected to fall as low as $80 in 2015, so $25 AMOLED module costs will still face bill of materials (BOM) cost-control challenges, the report noted.

"The biggest problem facing Samsung is that they are vertically integrated—when sales of Galaxy phones slow, the whole business upstream is underloaded and potentially unprofitable," Gray said. "However, Samsung is diversifying and now selling its OLEDs to other customers."

Meanwhile, to differentiate their products, local Chinese brands plan to adopt full high-definition (FHD) displays on the higher end of high-CP value handsets, with average prices of $160. For instance, local smartphone brand Meizu has already launched its first sub-brand handset, Noblue Note, which is equipped with a 5.5-inch FHD display, selling for $160.

"Consumers see display performance as the most obvious way to assess the quality and performance of a smartphone," Gray said. "While we have probably reached phone size limits, pixel densities will continue to increase along with color fidelity and wider color gamuts."