Samsung Mobile Display (SMD) makes 98% of the active-matrix organic light-emitting-diode (AMOLED) displays sold in the world, and it can’t make enough. This classic single-source bottleneck was a long time coming because it took a long time for Samsung to nurture the market to its current healthy state. But now the market has grown beyond SMD’s ability to satisfy it, and that is impeding the growth of the AMOLED market and forcing some makers of mobile handsets to make difficult decisions.

Ken Werner
Senior Analyst and Editor

It’s not that SMD doesn’t deserve its success. Samsung took the plunge into AMOLED when nobody else was willing to do so, and painstakingly developed the technology, ramped up volume manufacturing, and improved the initially disappointing manufacturing yields. Meanwhile, other companies stayed in R&D mode (LG), stuck to relatively small volumes (CMEL), abandoned the business before deciding to get back in again (AUO), or remained with segmented or passive-matrix OLED displays (Tohoku Pioneer and RiT Display).

The problem is that SMD’s Gen 4 fab (which actually makes the AMOLED front planes in two half-width processes) can barely meet the needs of Samsung Electronics’ own burgeoning smart phone production. As a result, HTC is switching back to LCD from AMOLED for some of its phones. And, an executive from Pantech, Korea’s Number 3 handset maker, recently said, "We will not use AMOLED displays in our new phones to be rolled out in the first half of next year because of supply issues."

According to The Korea Herald, he went on to say that SMD is not able to keep up with demand from Samsung Electronics, its parent company, because of limited capacity combined with surging demand. Samsung Electronics’ aggressive push to increase sales of its Galaxy S, is devouring the available AMOLED display supply, the executive said. Samsung said it intends to sell 10 million Galaxy S and Wave smart phones, every one of which has an AMOLED display.

Pantech will consider using AMOLED displays starting in 2H’11, when Samsung’s new Gen 5.5 fab is completed, the executive said.

More capacity is on the way, but not all that quickly. LG Display CEO Kwon Young-Soo, has said his company anticipates mass production of OLED-TVs no earlier than 2013. The company intends to make 30-inch OLED-TV panels in 2H’11, using its Gen 5.5 fab, which is on a very similar construction and ramp-up schedule as SMDs. The difference is that SMD intends to use its new fab for small and medium-sized displays, while LGD intends to make TV displays. Kwon also said LGD plans to produce AMOLED displays for mobile handsets in 4Q’10.

But LGDs ambitions are much more modest than SMD’s. LG plans to invest 250B won to expand its AMOLED production capacity to 1.5M units per month by 4Q’11. SMD is spending ten times as much to expand its monthly capacity to 30M units by July 2011, reported The Korea Herald’s Jin Hyun-Joo.

In Taiwan, AUO is installing AMOLED production equipment at its Gen 3.5 plant, with the intent of attaining a monthly production capacity of 7,000 substrates by the end of this year. In 2011, AUO expects to dedicate 15,000 substrates a month to AMOLED displays at the Gen 4.5 AFPD fab in Singapore, which it recently purchased from Toshiba Mobile Display (TMD). That’s one third of the plant’s monthly capacity. (The expectation is that AUO will continue to supply TMD with LTPS LCD panels from the AFPD plant.)

All of this provides only modest help for customers (who don’t happen to be Samsung Electronics) who want to use AMOLED displays in their high-volume products before mid to late 2011.