The rumors of Apple's iPhone 8 switching to OLED next year are all over the world, but the panel makers that currently have the ability to supply small-size OLEDs are almost exclusively SAMSUNG, meaning that Samsung may initially monopolize orders for iPhone 8 panels. Although LG Display, JDI (Japan Display), Sharp and other panel manufacturers have dropped billions of dollars to promote OLED mass production time, most of OLED production capacity is expected to be online at least until 2018, these investments can Whether the real recycling is still unpredictable. The higher the expectation, the greater the disappointment. The report pointed out that under the circumstances that it is difficult to ensure sufficient OLED supply next year, these panel factories that are eager to invest in OLEDs may still have to rely on the LCD (Liquid Crystal Display). The strong demand for mobile phone factories in China this year has driven LCD prices up, but next year's LCD supply growth – especially from China – may cause LCD prices to fall again.
Once OLEDs flood into the market, they will collapse.
If the LCD market in this industry deteriorates, the plan to invest in OLEDs will still be unable to stop, which is expected to put huge pressure on the financial performance of these panel manufacturers. Goldman Sachs expects LG Display's free cash flow to turn negative this year and the next two years. And even if the layout OLED burns money, the investment vision may never be realized. As the OLED production capacity of each panel factory goes online, the supply of OLEDs in the market will increase rapidly, and the price will naturally fall, which will weaken the profits that LG Display and other latecomers can earn. In addition, the popularity of OLEDs that have been replaced by LCDs has increased, and LCD prices will fall further. Thanks to the news of the rebound in LCD prices, LG Display's share price has risen nearly 45% since the February low. According to S&P Global Market Intelligence, the rebound in stock prices has pushed LG Display's corporate value to 4.2 times EBITDA (pre-tax before interest, depreciation and amortization), much higher than the 5-year average of 2.9 times. This means that if the industry's winds are in turmoil, LG Display may be extremely vulnerable.
