Did I understand correctly that Huawei may not find a foundry for its 40nm OLED drivers in mainland China?
Incorrect. Here is the translation for you
Jiwei Report (No Jianxin) Recently, it was reported that Huawei HiSilicon’s first OLED driver chip has entered the trial production stage and is expected to be officially delivered to suppliers by the end of this year. Huawei’s own products are also expected to be adopted.
Zeng Mengbin, CEO of Isaiah Research, revealed to Jiwei reporters that Huawei HiSilicon’s first flexible OLED driver chip adopts a 40nm process technology and plans to mass-produce in the first half of next year with a monthly production capacity of 200-300 wafers. The samples have been sent to BOE, Huawei , Honor test.
The release of domestic OLED production capacity, HiSilicon seizes the opportunity of OLED driver chips
Why did Huawei HiSilicon enter the OLED driver chip market at this time? If you look into it carefully, this should be a deliberate move under the changing circumstances.
First of all, the OLED driver chip does not require advanced manufacturing processes. Since the US ban on Huawei's chips, global foundries have been unable to produce 14nm, 7nm, 5nm and other advanced process chips for Huawei HiSilicon, and the OEM process for mature processes of 28nm and above also needs to apply for a license in the United States. At present, OLED driver chips mainly use mature 28nm, 40nm and 55nm process technology, and the United States may license wafer foundries to produce for Huawei.
Secondly, domestic OLED production capacity has begun to be released, and OLED driver chips have ushered in a period of market opportunities. In the 5G era, light, thin, flexible, and power-saving OLEDs are more in line with the development requirements of the smart phone industry, and the market demand is very strong. Omdia predicts that smartphone OLED panel shipments will reach 584.5 million in 2021, a 28% year-on-year increase compared to 2020. Among them, domestic OLEDs are entering large-scale competition, and shipments in 2021 are expected to exceed 100 million pieces for the first time, bringing huge market opportunities to OLED driver chips. However, at present, mainland OLED driver chip manufacturers cannot keep up with the demand of the domestic OLED market and need the support of Taiwan OLED driver chip manufacturers. If Huawei HiSilicon enters, it will have the opportunity to take a share in the fast-growing OLED driver chip market in Mainland China.
Finally, Huawei's smartphone business has a large demand for OLED driver chips. The US Huawei chip ban not only affects Huawei's high-end chip supply, but also affects the cooperation between Huawei and Samsung Display and LG Display flexible OLED. Huawei can only purchase flexible OLEDs and supporting OLED driver chips from mainland China. However, Huawei's smartphone business was hit hard by the US ban. In the first quarter of 2021, Huawei's domestic smartphone sales fell by 50% year-on-year. Global sales fell out of the top five for the first time, and its share may continue to shrink in the future. In addition, under the global shortage, Taiwan OLED driver chip manufacturers may gradually neglect Huawei, while mainland OLED driver chip manufacturers may not be able to meet Huawei’s needs. If Huawei HiSilicon enters the OLED driver chip, it can satisfy its own smartphone business. Purchasing needs can also expand customers other than Huawei.
In fact, Huawei HiSilicon has been developing OLED driver chips since 2018. At that time, Samsung Display and LG Display flexible OLED both used their own Korean OLED driver chips. Samsung Display did not allow suppliers Samsung LSI and MagnaChip to sell OLED driver chips to Chinese panel manufacturers. Mainland China did not have OLED driver chips with deep technology accumulation. Manufacturers, Huawei and BOE can only use Synopsys and Novatek's OLED driver chips. This also stimulated Huawei HiSilicon to actively deploy OLED driver chips.
Following Novatek’s development path, HiSilicon promotes OLED driver chip business
At present, the world’s major smartphone OLED driver chip manufacturers include Samsung LSI, MagnaChip, Silicon Works, and Novatek. Among them, Samsung LSI, MagnaChip, and Silicon Works are in a leading position. They only supply South Korean OLED panel manufacturers and are the second-tier Novatek service. OLED panel manufacturer in Mainland China.
The Huawei Hass target customers are mainland China OLED panel manufacturers and smartphone vendors, it is more likely to follow the path of Novatek has been promoting the development of OLED driver chip research and development.
Novatek mainly supplies FHD OLED driver chips to panel manufacturers in mainland China, because OLED panel manufacturers in mainland China are producing FHD OLED panels in order to ensure the cost performance and yield of OLED products. In order to meet the needs of OLED panel manufacturers in mainland China, Huawei HiSilicon also needs to develop OLED driver chips for FHD specifications.
Sima Qiu, a senior analyst at McGillor, pointed out that Samsung Display occupies most of the OLED market share whether it is FHD, Quad HD, rigidity or flexibility. On the other hand, Chinese mainland manufacturers, rigid OLED yield, production capacity, and production costs cannot compete with Samsung Display. In order to avoid competition with Samsung Display , mainland manufacturers are relatively passive in terms of rigid OLED production capacity layout. Therefore, the mainland rigid OLED driver chip market is not Huawei. The focus of HiSilicon.
From a trend point of view, the flexible OLED driver chip is the main direction of Huawei HiSilicon . Because most of the newly added OLED production capacity in mainland China in recent years is flexible OLED, the production capacity of flexible OLED panels in mainland China will continue to be released in the next few years, and flexible OLED is expected to accelerate its popularity in the smartphone market. UBI Research predicts that OLEDs are moving from curved to foldable and then rollable. By 2023, the output of flexible OLEDs will reach 353 million pieces. If Huawei HiSilicon can keep up with the development rhythm of the flexible OLED market in mainland China, it may grow into an important OLED driver chip manufacturer in mainland China.
In order to increase the production capacity of OLED driver chips, Huawei HiSilicon will not only continue to cooperate with wafer foundries in mainland China, but also may further cooperate with TSMC and UMC or support other wafer fabs. At present, Huawei HiSilicon flexible OLED driver chip adopts 40nm process, and the production capacity of the mainland foundry is relatively rich, which can meet the needs of Huawei HiSilicon; but Quad HD OLED driver chip and flexible OLED TDDI require 28nm process, Huawei HiSilicon may be possible in the future OEMs such as TSMC and UMC are required.
Wafer shortage still exists, HiSilicon’s OLED driver chip is full of resistance
Despite its ambitions, Huawei’s HiSilicon OLED driver chip market development is also facing numerous challenges. At the same time, the global spread of wafer capacity shortages will also affect its speed of advancement.
On the one hand, Huawei has both the smartphone business and the OLED driver chip business. Huawei HiSilicon’s OLED driver chip has many potential customers, most of which are Huawei’s smartphone competitors such as OPPO, vivo, and Xiaomi. They may tend to choose Novatek, Ruiding and other OLED driver chip manufacturers are unlikely to support the growth of Huawei HiSilicon’s OLED driver chip business. Prior to this, manufacturers such as OPPO, vivo, and Xiaomi have not used Huawei HiSilicon Kirin chips, Hongmeng systems, etc. The main customers of Huawei HiSilicon OLED driver chips will be Huawei, Honor panel manufacturers and some white-label manufacturers.
In addition to the limited customer base, on the other hand, Huawei's HiSilicon OLED driver chip business will also be affected by the shortage of wafer capacity. Current OLED driver chip manufacturing process being rapid migration from 40nm to 28nm, but 28nm production capacity, low yield mainland, are insufficient to meet Huawei Hass OLED driver chip production requirements, while Taiwan wafer capacity shortage, Huawei Hass will be difficult to take With sufficient production capacity, Huawei HiSilicon’s OLED driver chip business progress will be met with obstacles .
Will Huawei HiSilicon OLED driver chips "drive" a bright future? Only time will give the answer. (Proofreading/Aimeng)
