Smartphone tech upgrade seen as boon for China’s screen makers
China’s smartphone component manufacturers are expected to win business off the back of a technology upgrade, say analysts
More advanced phone screens aren’t just good news for tech-savvy phone users – the upgrade could also be a boon for China’s screen manufacturers.
Smartphone manufacturers are looking to upgrade screens to the vivid, higher resolution and more responsive AMOLED technology used in Samsung S7 or LTPS screens used in the iPhone 6S, and Chinese display manufacturers are well-placed to ride the wave of change, Oriental Patron’s equity analyst Chloe Liu said in a report.
Apple is among the companies taking part in the trend, with its iPhone 8, due to be released in 2017, expected to be the company’s first phone to use an AMOLED display screen, according to Liu.
The news is part of a rosy picture for China’s smartphone sector, with top vendors like Huawei “rapidly” gaining global market share, while international competitors Samsung and Apple lose ground, Liu said.
South Korea and Japan currently supply the bulk of panels for Chinese smartphones, but as those companies race to upgrade their LTPS production lines to AMOLED to catch up with Apple’s demand, there is likely to be a shortage of both types of screen this year and next, she said.
The gap provides an opportunity for display panel suppliers such as BOE, Tianma, Truly and China Star Optoelectronic Technology to move in on their competition, Liu said.
China’s number one smartphone vendor, Huawei, is expected to use LTPS in 62 per cent of its phones and AMOLED in 13 per cent of its phones by the end of the year, up from 46 per cent and 1 per cent respectively last year, she said.
Overall, Liu expects AMOLED screens will be used in 30 per cent of smartphones in the China market in 2020, up from 9 per cent in 2015, while LTPS use is expected to grow from 28 per cent to 40 per cent in the same period.
China’s third biggest module manufacturer will be helped by the growing global market share of China’s smartphone sector, which accounted for 44.1 per cent of total global shipments in the second quarter of this year, UOB KayHian’s analyst Jason Tsang said in a report.
“This is positive to TCLD as it focuses on providing its modules to Chinese smartphone manufacturers,” Tsang said.
TCLD’s sister company China Star Optoelectronic Technology, which plans to start mass production of LTPS in 2017, will help TCLD to “increase its bargaining power and obtain orders from top China smartphone vendors”, Liu said.
Display panel producer Truly is also likely to gain from the technology upgrade, with mass production of LTPS scheduled to begin this year, and AMOLED production kicking off in the second half of next year, Liu said.
Overall, Liu is expecting Chinese smartphone vendors to gain global market share from this year onwards “due to their increasing reputation and attractive price to performance ratio”.
Smartphone shipments from China to emerging markets are expected to experience a compound annual growth rate of 16.6 per cent from 2014 to 2019, Tsang said.
China, the biggest smartphone market in the world, accounts for 32 per cent of world sales, according to Morgan Stanley.
Leading vendor Huawei increased its market share in China to 9.4 per cent in the second quarter of this year, up from its 7.4 per cent last year, while second-biggest vendor Apple slipped to 11.8 per cent from 16.2 per cent in the same period, according to Oriental Patron.
