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Reducing production cost heats up competition of miniLED-backlit and microLED TVs

TV vendors are making efforts to boost sales of miniLED-backlit TVs, but have been faced with market risks because general demand for TVs tends to decrease along with worsening inflation and anti-COVID-19 lockdown in Chinese cities. In a similar situation, the launch of microLED TVs has been deferred.

In view of the shrinking global demand for TVs, Samsung Electronics and LG Electronics have cut planned procurement of TV-use LCD panels in 2022 by about 3.2 million ones, while China-based TV-use LCD panel makers have reduced output by lowering utilization of production capacities.

Samsung launched a series of miniLED-backlit TV models in 2021, but total sales volume in the year was short of the target of 2.0-2.5 million units. A few China-based vendors also launched miniLED-backlit TVs in 2021, but sales were in very small volumes mainly due to too high prices.

However, China-based vendors keep boosting sales of mini LED-backlit TVs by lowering retail prices. Konka has launched a 65-inch miniLED-backlit TV for sale in the China market at below CNY10,000 (US$1,504) and a 75-inch model at below CNY15,000. TCL has decreased retail price for a 65-inch smart quantum-dot miniLED-backlit TV from up to CNY13,000 in 2021 to up to CNY12,000 currently and those for 75-inch model from up to CNY17,000 to up to CNY15,000. In addition, TCL launched a 55-inch model for sale at CNY4,499 in mid-May 2022.

Samsung launched a 75-inch miniLED-backlit TV in the China market at a sales price of CNY44,500 in 2021 and has lowered the price for a new version of the model unveiled in 2022 to CNY35,000. Besides, Samsung has lowered retail prices for a 55-inch 4K miniLED-backlit TV and a 65-inch 8K model in the Taiwan market by 24% and 34% respectively.

Reduction in production cost for miniLED-backlit TVs has been of concern in 2022. Samsung, LG and Sony have adopted COB (chip on board) mini LED packaging to make miniLED-backlit TVs functionally competitive with OLED TVs, whereas China-based vendors have chosen less costly POB (package on board) miniLED packaging in order to keep down production cost.

According to market studies, global shipments for miniLED-backlit TVs will increase from 2.0 million units in 2021 to 4.5-4.6 million units in 2022 and those for miniLED-backlit monitors from 51,000 units to 65,000 units.

As Taiwan-based Epistar and many China-based makers have been expanding miniLED chip production capacities, if actual sales of miniLED-backlit TVs fall short of forecast, there is likely to be overcapacity for miniLED chips.

Samsung originally planned to launch 76-, 88-, 99- and110-inch microLED TVs in 2021 but deferred the launch because assembly lines of microLED modules at its factory in Hanoi, northern Vietnam, were temporarily closed due to the pandemic.

To cope with the situation, Samsung has set up an assembly line and mass transferred microLED chip production back to Seoul. Samsung originally planned to kick off production of a new-generation 89-inch microLED TVs in May 2022, but has decided to defer it until the third quarter of the year. Besides, Samsung has developed 101- and 114-inch models for new generation but has not decided on schedules of production.

Unlike the Wall series based on PCB substrates, Samsung adopts TFT glass substrates for new-generation microLED TVs to be launched in 2022. TFT glass substrates are of higher flatness than PCB ones and thus more suitable for mass transfer of microLED chips and layout of complicated circuit routes, but pose challenges to yield rates for connecting glass substrates and precise circuit routes.

Market analysts expect the application of microLED to substantially take off in 2024-2025. Of estimated global demand for 240-250 million TVs a year, the proportion for high-end models consisting of OLED, COB miniLED-backlit and microLED TVs will rise from 7-8% in 2021 to14-15% in 2025-2026. Based on the estimation, there will be global demand for 3.5-4.0 million high-end TVs in 2025-2026 and micro LED TVs will take up 1-2% then.

Supply chain makers expect production costs for microLED panels, along with increasing output, to keep dropping to one-twentieth of the current level in 2025-2026.

South Korea- and China-based OLED panel makers keep expanding production capacities and this will heat up competition between OLED TVs and miniLED-backlit LCD TVs, microLED TVs.