A significant announcement caught our attention this week, one related to the global race for next-generation high technology development. China Daily echoed a report from China’s Xinhua news agency indicating that the country’s first flexible display production line will go into operation next year. We believe that this is a rather significant development for high tech and consumer electronics product development and supply chain sourcing strategy.
According to Wikipedia: “A flexible display is an electronic visual display which is flexible in nature; differentiable from the more prevalent traditional flat screen displays used in most electronics devices. In the recent years there has been a growing interest from numerous consumer electronics manufacturers to apply this display technology in e-readers, mobile phones and other consumer electronics.” The technology is evolving to feature more flexible screens with higher contrast and wider visual angles compared with traditional flat-screen display found on many of today’s electronic devices.
Further noted is that research and development into flexible e-paper-based displays largely began in late 2000s with the main intentions of implementing this technology in mobile devices. However, this technology has recently made an appearance, to a moderate extent, in consumer television displays as well.
Since 2005, Sony Electronics has had interests in a flexible display video, promising to commercialize this technology in TVs and cellphones sometime and in May 2010 Sony showcased a rollable TFT-driven OLED display.
In 2008, Nokia first conceptualized the application of flexible OLED displays in mobile phone with the Nokia Morph concept mobile phone.
In 2010, Samsung Electronics announced the development of a prototype 4.5 inch flexible AMOLED display. In early 2012 Samsung acquired Liquavista, a tech firm with expertise in manufacturing flexible displays. By October of 2013, the Samsung Galaxy Round was unveiled as the world’s first mobile phone with flexible display that featured a 5.7″ touchscreen display made of flexible material, allowing its body or the screen to be bendable. The concept would later surface as part of the Samsung Galaxy Note Edge and today, Samsung is seen as a recognized leader in this type of technology.
This week’s investment news stems from BOE Technology Group Co., Ltd. is a supplier of display products founded in 1993 and now headquartered in Beijing The firm’s business profile indicates that it is engaged in research, development, and technology accumulation which led them in establishing business units such as TFT-LCD for IT, mobile and TV products.
The report indicate that BOE will invest almost $7 billion on its 6th generation AMOLED production line in Chengdu, which is scheduled to go into operation by sometime next year., no doubt in an attempt to directly compete as a supply chain component alternative to Samsung.
From our Supply Chain Matters lens, there are two significant aspects to this week’s announcement.
The first is the government of China’s strategic plan for the country to be much further invested in advanced technologies. BOE recently reported first-half 2016 results that reflected net losses amounting to upwards of 600 million yuan. Thus, obtaining such significant financial investment implies external assistance from China’s resident banks, municipal investment agencies and/or other governmental agencies. China based smartphone producers have been increasingly gaining domestic market share based on their ability to offer premium functionality at more affordable price points. The existence of a new domestic source of the production of flexible screens can add to that momentum and provide domestic producers a value-chain technology edge.
Further, with Apple so significantly invested in China based value-chain capabilities, we wonder aloud if the potential of Apple’s future product development and supply needs had anything to do with such an investment. Apple currently sources its LCD display needs among four suppliers including Samsung Electronics. A China based sourcing could provide Apple additional bargaining leverage for future sourcing decisions related to flexible displays. Such capability could also be viewed as a threat to Japan, Taiwan and South Korea based LCD screen providers, not to mention any hopes of the U.S. to be sourced with such advanced screen technology.
LCD display technology development and advanced production process capabilities are very expensive to maintain with each technology evolution and thus supply agreements assuring large volumes are essential.
Thus, this week’s announcement should be noted as rather noteworthy, and if BOE is successful in its development and production timetables, it will present a different competitive dynamic in the volume production of flexible screen technology, not to mention triggering other rather expensive rounds of additional investments from other existing screen suppliers.
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