Asia Display:Lack of key innovation =pricing competition

Large panel: 8K TV, improving features (QD, local dimming), and PID. On 8K,AUO demonstrated an 85” bezel-less curve 8K TV and Innolux showcased a 65” 8KTV panel. We believe 8K TV will likely focus on the 65” and above TV market asviewers may not tell the difference between an 8K and a 4K TV below 65-inch innormal viewing distance. Nonetheless, we believe cost is still too high for 8K TV dueto lower production yield rates, higher component costs such as more driver ICs,brighter backlight, and more complex heat-sink design. Other improvements arebetter colour gamut via QD (quantum dots) solutions and higher contrast ratio andHDR (high dynamic range) via more local dimming areas.

    Mid/small panel: 18:9 and automotive. 18:9 aspect ratio panel is the key focus.

    However, comment on pricing is relatively soft with rising supply. Automotive panelcould be an area with potential solid demand and should be a focus for AUO andInnolux to focus. Free form design and no urgent need for higher resolution.

    e-Paper and Corning’s solutions for semiconductors are other highlights. E-Inkdemonstrated coloured solution which attracted lots of traffic. Corning showssolutions for application such as DOE (diffractive optical element) for 3D sensing andalso aim to penetrate into IC substrate core layer market.

    Cautious on Taiwan panel makers and positive on Korean AMOLED players.

    1) 8K TV too early to contribute and other improvements not enough to compete withOLED TV; 2) lack of exposure in OLED for mobile panel; and 3) oversupply risk in 2018will continue to exert pricing and margin pressure. See table below for our preferences.