Market Insight

[Display Dynamics] Market with potential profit and risks: Demura in the OLED module process

December 06, 2019

Chase Li Chase Li Senior Analyst, Display Manufacturing Technology

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Key findings

  • In recent months, Chinese companies that produce demura equipment for OLED production have received great attention from VC and personal investors. Regardless of these Chinese companies’ size and market share, they get requests, offerings, and investments from varied sources constantly.
  • This rising attention of the demura equipment is due to its potential in the coming years, alongside OLED market growth. The overall market of demura equipment may be as high as $266 million in the following years.
  • While this market seems very attractive now, intense competition and profit erosion may happen sooner than expected because of the active involvement from Chinese players and VC. 

In recent months, Chinese companies that produce demura equipment, which is used in OLED production, have received great attention from VC and personal investors. Regardless of these Chinese companies’ size and market share, they get requests, offerings, and investments from varied sources constantly.

This rising attention of the demura equipment is due to its potential in the coming years, alongside OLED market growth. The overall market of demura equipment may be as high as $266 million in the following years.

While this market looks attractive, there are many potential risks for the new players and investors as well.

Demura is vital in OLED

OLED is a current-driven device and very sensitive to external and internal influences. Unlike LCD, it is better to have each OLED panel to undergo the demura process in the OLED module phase to increase the yield. In order to meet the Total Average Cycle Time (TACT) requirement, the workload in the OLED module phase increases, thus, more demura equipment are needed to meet the productivity requirement.

Additionally, cell phone makers are trying to compete by giving their products different sharp displays, like 2.5D and 3.5D displays, foldable display, and so forth. Those requests do not only increase the likelihood of mura creation but also makes the OLED module process more difficult for panel makers.

Consequently, demura process in the OLED module phase becomes extremely important. In order to increase the yield, it is better to adopt demura process for all panels, since all panels need uniform brightness before shipment.

The basics of a demura equipment

A demura equipment is a complex system, integrated with one or multiple working stations, and AOI systems.

  • Multiple working stations, usually four working stations in mass production (MP) line and one working station in research and development (R&D) line, are needed to meet the requirement in the TACT since the entire demura process includes many stages, such as multiple image extraction, data processing, and brightness adjustment. The entire process is approximately 100 seconds (s) and above to process one OLED panel.
  • The automated optical inspection (AOI) equipment in the demura equipment is the key component to collect and analyze basic information for demura process. Among all processes, image extraction takes the longest time, since dozens of photos are captured in the process.
  • In image extraction, a photo is taken by the spacing lighting approach.
  • Once data is collected and enhanced, proper algorithm will be used to identify the defect inside of the panel and adjust the current-voltage characteristic curve (I-V curve) to increase the uniformity in each pixel.

Potential market filled with challenges

Since it is better to have each OLED panel to undergo the demura process, there will be a huge need for the demura equipment in the next few years. In general, many demura equipment, used in MP line, have four working stations with TACT around 100s. For a Gen 6 OLED line with 80% yield rate and 70% uptimeat least 15 units of demura machines are needed to fit 15k/m capacity. Each demura equipment is worth between $300,000 and $600,000, therefore, equipment vendors take a potential revenue between $13.5 million and $27 million for a 45k/m fab.

Considering the announcement and construction of Gen 6 OLED fabs in China, the potential market for demura equipment may be as high as a total of $266 million in the next a few years. To remain competitive in this market, equipment vendors are developing equipment with less tact time and more working stations. By reducing tact time from 100s to 70s and below and deploying five working stations to each demura equipment, the productivity of the equipment can be enhanced.

While the market has many potentials, there are some challenges and risks as well:

  • Profitability may decrease rapidly over time. So far, this market has a lower entry barrier than others, thus, players may occupy this profitable market quickly. This then, may lead the profit rate to decline rapidly. Prior to 2018, the cost of a demura machine was around $600,000 per equipment, and it has been as low as $300,000 per equipment in 2019.
  • This market has been occupied by many players, and the market may not be large enough for everyone. Currently, this market is filled with many Chinese companies, including Wuhan Jingce, Granda, Seichitech, Gaci Optical and Lead China, as well as smaller companies, such as Flexvision. Hence, this market has enough players, and they are well-connected to panel makers. It will be hard for new players to get into the market and compete with the existing players.
  • Currently, the OLED market does not like the LCD industry, thus, the potential market may not be as big as VC wanted in the first place. Many smaller demura companies told VC that the OLED module industry is similar to the LCD module industry, which is filled with many third-party fabs, therefore, the potential market for a demura equipment may be higher than $266 million. Sadly, this is not the case, at least not in the next few years. OLED is more complex than LCD, and panel makers would like to build the module themselves. It will be hard to see existing panel makers to sell OLED open cell panels without demura process in the OLED module phase, thus, only a few third-party OLED module fabs will be built in the upcoming years and they may not be able to process enough panels.
  • Ideally, it is better to have each OLED panel to undergo demura process. However, the demand for demura equipment may not be as high as expected.
    • If a panel maker has a high yield, there is a low demand for demura equipment.
    • Even for panel makers with lower yields, not all panels must undergo demura process, which leads to low demand for demura equipment. For instance, BOE B7 and B11 OLED fabs have purchased only 28 and 24 demura equipment, respectively, to this date.

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