The Suspension and Stagnation of AMOLED Development
Why did Taiwan’s FPD industry slow down its pace of R&D in OLED? Th is chapter sheds light on the turn of events in the Taiwanese FPD industry’s development of OLED panels, taking the R&D of AMOLED—which currently possesses the mainstream technology in OLED panels—as a case study.
3.4.1 The Rise of AMOLED Development Among Taiwanese Companies
While the competition in OLED development started in 1987 when a report by C.T. Tang of Eastman Kodak led to the recognition of the possible practical application of OLED devices, it was Tohoku Pioneer Corporation’s passive-matrix organic light-emitting diode (PMOLED) panel in its FM multiple tuner for cars that triggered the commercializa- tion of OLED panels in 1997 (National Center for Industrial Property Information and Training (INPIT) 2002 ). In the same year, TDK pre- sented a mono-color AMOLED display supporting video images at an
electronics show (Komori 1997 ). In 1999, the joint development of a 2.4 inch full-color AMOLED display by Sanyo Electric and Eastman Kodak led to the commercialization of AMOLED (Zhang et al. 2005 , pp. 4–30).
In response to these developments, Taiwanese companies also acceler- ated their R&D in OLED from around 2000. For example, Acer Display Technology, Inc.—AUO’s predecessor—established an R&D team for OLED in 2000 (CTIMES 2013 ), and CMO also increased its staff engaged in OLED research to more than 40 persons (Chiu 2004 ).
Th ese events triggered the rise in exhibitions of AMOLED pro- totypes. In March 2003, CMO and its Japanese subsidiary IDTech, and IBM Research announced their success in developing a 20 inch AMOLED panel using amorphous silicon TFT technology developed through a division of labor at their laboratories in Switzerland, Japan, and the USA (Chi Mei Optoelectronics Corp. 2006 ). Th is was subse- quently displayed for exhibition at the Society for Information Display (SID) in May 2003. AUO also announced its success in developing a 4 inch amorphous silicon AMOLED panel capable of displaying diff erent images on both sides of the panel for the fi rst time in the world in October 2004. Th is was displayed at the FPD International held in Yokohama. 3 In October 2004, CMO established Chi Mei EL Corporation by spinning off its OLED division, and Chi Mei EL developed a 2.2 inch full-color low- temperature polysilicon (LTPS) AMOLED panel through joint research with ITRI (Asamoto 2011 , p. 174). In October 2006, an AMOLED panel for 25 inch TVs devel- oped jointly by CMO and Chi Mei EL was displayed for exhibition (Chi Mei Optoelectronics Corp. 2008 ). Furthermore, in January 2006, AUO’s 2 inch full-color AMOLED panel was commercialized by its usage in a smartphone (BenQ-Siemens, S88).
3 ‘Youda keji zhongxin fabiao quanqiu diyi pian shuangmian quancai zhudong shi juzhen youji faguang xianshiqi’ [AMOLED Science Technology Center releases the fi rst double-face color AMOLED in the world]. 12 October 2004. AUO web site. http://auo.com/?sn=21&lang=zh- TW&c=2&n=392 (accessed on 20 January 2013).
3.4.2 The Suspension and Stagnation of R&D by Taiwanese Companies and Government- Affi liated Research Institutes
Despite these developments, AUO decided to suspend R&D of AMOLED in 2006. Th e slow market formation and diffi culties to raise the low yield ratio are said to be its underlying reasons (Chung 2011 ).
Th e fall of AUO’s net profi t to sales to 3.1 % in 2006 may also have had some impact upon the decision to suspend the development of AMOLED. However, even though AUO was a loss-generating enterprise more or less permanently since 2009, it had maintained its capital invest- ment (mainly on 8.5G TFT-LCD panels) at a level on par with that of 2006 and, at the same time, restarted its R&D on AMOLED (since the end of 2008, stated later). Judging from these circumstances, the slow market formation and technological diffi culties as pointed out by Chung ( 2011 ) most likely were the main reasons for the suspension of R&D on AMOLED.
Even though the CMO Group continued its development of AMOLED by utilizing Eastman Kodak’s technology on small and medium-sized AMOLED through a technological tie-up agreement regarding AMOLED among CMO, Chi Mei EL, and Eastman Kodak in May 2007 (Chi Mei Optoelectronics Corp. 2009 ), it suff ered an exodus of human resources engaged in the development of AMOLED. Th is was triggered by the announcement on Innolux Corp’s merger with CMO in November 2009, given the deterioration of business amid structural shifts in the FPD market (Chung 2011 ). As a result, Chimei Innolux Corp’s AMOLED development was forced to slow down.
Given the limitations of resources and social capabilities faced by com- panies and industries of developing countries, the government is said to play an important role for such companies and industries to catch-up and overtake their rivals in advanced countries (e.g., Gerschenkron 1962;
Haggard 1990 ; Amsden 1989 ; Wade 1990 ). Th e Taiwanese government has in fact engaged in the FPD industry’s expansion of the breadth of R&D through ITRI’s eff orts to expand the breadth of R&D in OLED from an early stage, as in the case of the LCD industry (Asamoto 2011 ).
However, ITRI’s R&D in AMOLED was also reduced sharply along with AUO’s suspension of AMOLED development in 2006, on the grounds that it was regarded as a waste of government resources to develop unwanted technologies for private sector companies. 4 Th is decision also led to the contraction of the breadth of R&D of AMOELD in Taiwan.
In a refl ection of these conditions, Taiwan’s AMOLED-related exhi- bitions at SID, ‘Display Taiwan’, a trade show on FPD, in 2009 were limited to ITRI’s material and fl exible technology (Kao et al. 2009 ). As described above, a sharp contraction of the breadth of R&D of Taiwan’s FPD industry occurred in a few years starting from 2006. From that year onward, their R&D resources were focused mainly on large TFT-LCD panels for use in TVs such as the enlargement of glass substrates.
3.4.3 Withdrawals from the Market and Postponement of Development by Japanese Companies
During this time period, not only the Taiwanese companies but increas- ingly Japanese companies withdrew from the OLED market and took a wait-and-see stance (Kido 2013 ). For example, even though NEC was engaged in the development of OLED in tandem with Samsung SDI in 2001, it announced its withdrawal in February 2004. ELDis, Inc., a maker and seller of AMOLED formed jointly in 2001 by Tohoku Pioneer, Sharp, and Semiconductor Energy Laboratory, was dissolved in December 2005 on the grounds that its manufacturing and sales business of TFT substrates for AMOLED displays were no longer viable. Even though Sanyo Electric also established SK Display, a joint venture with Eastman Kodak for the purpose of OLED business in 2001, it withdrew from the business along with its decision to liquidate the joint venture in January 2006.
Decisions to put off development were also taken during this period.
Sony’s termination of production of PDAs with 3.8 inch OLED panels in
4 An interview with an industry analyst of a government-affi liated research institute on 17 October 2012.
2005 and Toshiba’s postponement of the sales of household-use OLED TVs in 2007 are some examples (Chung 2011 ).
However, note that Japanese companies such as Sony and Toshiba kept up their R&D on AMOLED even in the mid-2000s despite the termina- tion of their production and the postponement of sales plans. Th is forms a contrast with Taiwanese companies, which nearly terminated their R&D on AMOLED as well as their production and sales, as described above. Th erefore, the number of Japan’s patent acquisitions related to OLED in the USA was still three times that of Taiwan’s in the latter half of the 2000s (Fig. 3.2 ). Th is is also an expression of Taiwan’s narrower breadth of R&D in the FPD industry.
3.4.4 South Korean Companies Ramp Up Patent Acquisitions and R&D
In contrast, South Korean FPD makers launched a further off ensive in the development of AMOLED. As shown in Fig. 3.2 , they reinforced their own R&D while acquiring patents on a massive scale from with- drawing companies and strengthening technological tie-ups.
In addition to the acquisition of approximately 70 patents from NEC, Samsung Electronics acquired some 20 patents developed by a joint ven- ture company with NEC (Ma 2010 ). While LG Display had amassed technology related to FPD including OLED through a joint venture with Philips, it also purchased approximately 50 patents from Xerox in 2005 (Ma 2010 ). In 2006, LG Display commenced joint development of AMOLED with Eastman Kodak, established GOT in the USA in 2009, and purchased 792 patents from Eastman Kodak under GOT’s name. In the same year, LG Display established strategic tie-up relations including cross-licensing with Idemitsu Kosan. Th is led to Idemitsu Kosan’s invest- ment in 32.73 % of GOT’s capital. Moreover, its stress over AMOLED was also refl ected in its organizational structure. In 2008, LG Display established its AMOLED division.
In particular, Samsung Electronics achieved a head start in mass pro- duction of AMOLED. In October 2007, Samsung SDI—a subsidiary of Samsung Electronics—started operation of a mass production line of
small and medium-sized AMOLED panels (capable of producing three million panels per month) for the fi rst time in the world. In September 2008, Samsung SDI and Samsung Electronics focused on production of small and medium-sized panels and established Samsung Display with iAMOLED as its fl agship. Samsung Electronics also engaged aggressively in the development of new products, succeeding for the fi rst time in the world in the production of AMOLED panels including 6.5 inch fl exible AMOLED in June 2009 and 14 inch transparent AMOLED panels in January 2010. 5 Moreover, in 2010, Samsung started the full-fl edged sales of AMOLED panels through its use in its Galaxy S smartphones.
3.4.5 Taiwanese Companies Resume Development of AMOLED but Are Still Unable to Make Up for the Delay in Catch-Up
Given the South Korean makers’ clear emphasis upon AMOLED, and in particular the mass production and market launch by Samsung Electronics and establishment of Samsung Display, the Taiwanese makers could not but feel the need to restart R&D on AMOLED.
AUO reestablished its AMOLED research team at the end of 2008.
In July 2010, it acquired a 4.5G plant held in Singapore by Toshiba for use as its AMOLED production line. It also promoted technologi- cal tie-ups. In February 2012, AUO entered into a strategic tie-up with Idemitsu Kosan, and in April 2012, started joint development toward the mass production of AMOLED for use in TVs with Sony (Li 2012 ).
Innolux Corp. is also starting to focus again on the development of AMOLED. By using the production line formerly used for LTPS by Toppoly Optoelectronics Corp. (which it acquired as its affi liate) for the development of AMOLED, Chi Mei EL Corporation announced that it will expand its production line in March 2010. Focus is placed primarily on small and medium-sized AMOLED panels (Li 2012 ).
However, Taiwanese FPD makers still lagged behind in terms of the construction of a framework for mass production. According to media
5 Samsung Display web site ( http://www.samsungdisplay.com/ , accessed on 21 January 2013).
coverage, AUO succeeded in mass production in October 2013 (Yuan 2013 ).
Six years had passed already since the Samsung Group had constructed a mass production framework. In terms of production capacity, Samsung Display is said to possess capacity to produce 152,000 panels/month in contrast to AUO’s 52,000/month according to media reports.
3.4.6 The Impact of the Slow Development of AMOLED upon the Business Conditions of Taiwan’s FPD Industry
If the possession or lack of manufacturing technology for OLED panels does not have much of an impact upon business performance, the option to slow down the pace of R&D would have been a rational choice. However, it is already having a certain level of impact upon the business perfor- mance of FPD companies. To be more precise, the lag in construction of a framework for mass production of AMOLED—in combination with the weakness of R&D on high-resolution technology necessary for high- end small and medium-sized LCD panels—may have led to the slow response to market structure shifts such as the softening of the TV market and the rise in demand for small and medium-sized panels along with the spread of mobile devices.
At present, AMOLED has weak points such as diffi culties in produc- ing large panels and high costs for production due to the diffi culty in raising the yield ratio. However, in addition to the fact that it is easier to raise the yield rates of small and medium-sized AMOLED panels in comparison to large panels, its properties such as its lightness/fl atness, power consumption conservation, and compatibility with touch panels, they have been used mainly in smartphones. In fact, the market size of OLED panels consisting mainly of AMOLED panels has expanded from USD70.6 billion in 2008 to USD548.5 billion in 2013, with South Korean companies (mainly Samsung Electronics) making up 86.0 % of the total market share. 6 In particular, Samsung is taking a proactive stance
6 Liu and Chao eds. ( 2012 ), material provided by Industrial Economics and Knowledge Center of Industrial Technology Research Institute.
toward the use of AMOLED panels in smartphones, making it a source of its profi ts. For example, Samsung Electronics’ OLED business suc- ceeded in reaping operating profi ts of KRW270 billion (sales of KRW2.3 trillion), which was used to off set approximately half of its losses in the LCD business (operating loss of KRW490 billion, sales of KRW6.25 trillion) (Sangyo Times 2012 ). Th e Taiwanese FPD companies have lost this business opportunity.