Features Taiwan Electronics

Apple's adoption of mini LED sparks boom time for Taiwan suppliers

25, Aug. 2020

Taiwan’s largest mini-LED manufacturer Epistar Corp. is headquartered in northern Taiwan’s Hsinchu Science Park. (Photo courtesy of Epistar)
Taiwan’s largest mini-LED manufacturer Epistar Corp. is headquartered in northern Taiwan’s Hsinchu Science Park. (Photo courtesy of Epistar)

By Gloria Cho

TAIPEI, NNA— Apple’s adoption of cutting-edge mini LED backlighting in its upcoming launches of larger portable devices will benefit the supply chain of Taiwanese suppliers in a big way.

They include Apple's new 12.9-inch iPad Pro which will hit the market in Q1 of 2021 and bigger models to be launched subsequently. The iMac Pro models to be introduced next year will also have the same display technology, according to a forecast report by Taiwan-based tech research institute TrendForce Corp.

Apple's mini-LED adoption is expected to bring significant orders for Taiwanese display driver IC design houses and backend service providers.

High demand from Apple is projected to contribute $180 million worth of orders in 2020 and $600 million in 2021 to its LED chips suppliers, Kuo Ming-chi, an analyst at TFI Securities and Futures, said in a report. This figure is expected to hit $1.43 billion in 2022.

Compared to OLED (organic light-emitting diode), mini LED offers a far better display and more benefits. It has a higher range of brightness, contrast ratio and deeper blacks apart from power efficiency. The technology is also less vulnerable to burn-in and uses inorganic Gallium nitride (GaN) that does not degenerate over time.

Catering to Apple's needs is a formidable Taiwan supply chain that includes players like major LED epitaxial wafer and chip manufacturer Epistar Corp.; testing and sorting service provider Fittech Co. and PCB assembler Taiwan Surface Mounting Technology Corp.

They are expected to play a vital role in the production of the slew of new Apple products to hit the market next year.

“Traits such as industry-leading technologies that ensure finished products are cost-effective with required high-performance, as well as flexibility during collaboration, have made Taiwan suppliers an ideal choice for Apple,” Alex Tseng, a research fellow at Taiwan Institute of Economic Research, told NNA earlier in August.

“Also, Taiwan suppliers’ sole focus on providing OEM service has helped to relieve brand owners from concerns for potential competition,” added Tseng.

As a supplier to Apple through 2021, Epistar is expected to rake in NT$30 billion ($102.1 million) including NT$18 billion from the new LED technology, according to estimates by TFI Securities and Futures.

In 2019, Epistar recorded its historic net loss of NT$3.75 billion since its listing in 2001. It put the blame on competition due to long-running LED overcapacity after China bolstered the semiconductor and display sectors with capital subsidies to ramp up production at Chinese plants.

Upping the game with faster R&D

Competition has always existed but the battlefield has now changed in favor of Taiwanese suppliers, Rider Chang, vice president of Epistar noted. “The quality threshold for mini LED is higher than conventional LED products, which has set an initial threshold to bar lower-tier Chinese manufacturers,” he said.

Trendforce also pointed out that obstacles in the unresolved U.S.-China trade spat and patents have deterred any potential collaboration between Chinese producers and Apple at this moment, despite their ability to offer huge product capacity at lower costs.

“We are confident to maintain our leadership in the development of mini-LED through 2021,” Chang said.

But analyst Kuo believes that the market share of Epistar could be dented by rivals. They include South Korea’s Seoul Semiconductor Co., Germany’s Osram GmbH, and China’s San’an Optoelectronics Co., which will all start mass production and shipment by 2022.

By then, San’an Optoelectronics is expected to receive about 10 to 20 percent of Apple's mini-LED orders.

In the face of competition, Chang said cooperation among Taiwanese suppliers to accelerate production is critical to their success.

This is evidenced by Epistar’s tie-up with local peer mini-LED maker Lextar Electronics Corp. in June to set up a holding company, Ennostar Inc., which will be listed in the Taiwan stock market on Oct 20.

Through the partnership, the two companies are expected to contribute 12.4 percent to global LED chips production, according to TrendForce.

But for Epistar to maintain its leading edge in the sector beyond 2021, it has to implement product differentiation and improvements by speeding up research and development, Chang said.

The global mini-LED market is expected to soar to $5.9 billion by 2025, at a compound annual growth rate of 86.6 percent, according to a report by Grand View Research.

Then it will be the turn of micro LED technology to boom after smaller devices such as wearables, smartphones and automotive displays make the switch to it. Micro LED display shipments are expected to rise to 16.7 million units in 2027, according to research facility Omida.

Based on even smaller mini variants, MicroLED displays are believed to be used in Apple Watch for next year too.