Demand-side model: small-pitch LEDs have natural advantages
What are the key technical standards in large-screen display systems? The first is the gap. Whether it is DLP rear projection splicing wall or LCD splicing wall, it cannot be compared with small-pitch LED. The latter is a natural integrated product with no significant gaps. The second is the display effect such as brightness and contrast of the picture. In this regard, small-pitch LED screens are significantly better than general engineering projection edge fusion products. The third is product implementation cost. Compared with DLP splicing and high-end engineering projection products, the cost of small-pitch LEDs is in the same order of magnitude, but higher. However, the price of small-pitch LED screens is falling faster than competing products.
It is these advantages that determine the popularity of small-pitch LED screens in the engineering display industry. However, a simple comparison with competing products cannot explain how vast the potential market demand for small-pitch LED screens is.
On the one hand, small-pitch LED screens are not a new "technological trend." Since the birth of LED displays, the process of continuous pursuit of smaller spacing has continued. This is not only the basic requirement for currently popular indoor applications, but also the basic technical pursuit of all outdoor screens. In other words, as long as the cost is appropriate, all LED display systems will continue to have smaller spacing.
On the other hand, the display performance of small-pitch LED screens is very good and can meet the needs of movies, home TVs, etc. for color, brightness, contrast and other indicators. If small-pitch LED screens can effectively control costs, it will not be difficult to open up cost-sensitive markets such as home, commercial, and education. At the same time, small-pitch LED screens are gradually realizing 1 mm level or even smaller spacing technology. The phenomenon of screen granularity is increasingly being solved by smaller spacing and better optical packaging design. It is also a matter of course to enter the growing cinema projection market.
Therefore, from the demand side, small-pitch LED screens not only have unique technical advantages in the engineering display market, but also have a broader future market development space. Small-pitch LED screens will even be a "mass" technology product: this market may not be billions, but tens of billions, or even tens of billions in output value - the only condition required for this development hypothesis is "price decline."
Prices continue to fall: small-pitch LED screens will inevitably continue to grow at a high rate
For a display technology, its final market size is closely related to its cost control capabilities. The hope of small-pitch LED screens in the commercial display, digital signage, education display, and even home display markets is based on declining prices as the basic value standard. The judgment of price trends also determines how much effort the international and domestic industries can make to promote the development of small-pitch LED screens.
Since 2014, the domestic small-pitch LED screen industry has experienced large-scale growth. The main reason is that standard products around P1.5 have become practical and prices have fallen further. This year, the small-pitch LED screen industry has more than doubled. In 2015, despite the severe economic situation at home and abroad, small-pitch LED screens still achieved more than 80% market expansion. At the same time, mainstream products in the market began to upgrade to the P1.2 standard.
In fact, in addition to technological progress, price decline is the biggest driver of the large-scale growth of small-pitch LED screens. So what will be the price trend of small-pitch LEDs in the future?
The core cost of small-pitch LED screen products depends on the lamp bead product. From 2014 to 2015, the average market price of the LED lamp bead industry fell by more than 50%. This trend will inevitably affect the price trend of small-pitch LED display lamp beads. Research believes that from 2014 to 2018, small-pitch LED lamp beads are likely to maintain an annual price drop of about 20% due to the decline in overall LED lamp bead industry prices, the expansion of market demand for small-pitch lamp beads, and the increasing maturity of manufacturing technology. This will at least provide more than 13% cost-end price reduction space for small-pitch LED screens.
In the entire LED lamp bead industry, market saturation and reduced demand exist simultaneously. This is the main reason for the price decline in the LED lamp bead industry.
First of all, the luminous efficiency of a single LED lamp bead continues to increase, which causes the number of lamp beads and substrate size required to provide the same lighting brightness to continue to decrease. In markets such as mobile phones, LCD TV backlights, household and engineering lighting, every time the brightness of LED lamp beads increases by 10%, it means that the overall market demand measured by the number of particles decreases by 10%.
Second, the LCD industry is facing the rapid rise of OLED. The former requires LED lamp beads as backlight, while the latter does not. The development of OLED display technology will objectively cause the LED lamp bead industry to gradually lose the huge global market of 200 million TVs, 300 million computers, and 2 billion mobile phones every year.
Third, in the basic lighting market, the lifespan of LED lamps is at least 10 times that of traditional energy-saving lamps. Also, if the overall market lighting demand is stable, after adopting LED light source products, the actual annual purchasing volume will be reduced a lot. This will allow LED lamps to replace traditional energy-saving lamps. There will be a very high "replacement" explosion period in the early stage of the market, and then there will be a very stable and long market calm period. With the trend of LED lights completely replacing energy-saving lamps since 2013, the future expectations of the entire market have shown a "saturation trend."
Fourth, in the lighting application market, LED lights will face challenges from OLED lighting technology in the future. From the perspective of lamp beads, LED and OLED have no production similarities.
Fifth, the growth of the LED display market, especially the outdoor display market, is weak. Outdoor LED large screens basically take the development of urbanization as the main demand increment point, and have "saturation" in internal motivation.
Combined with the above factors, it can be seen that the overall demand for LED lamp beads is not so optimistic: the decline of backlight is inevitable, high-brightness and high-efficiency products actually lead to a reduction in total market demand, and there will inevitably be a quiet period after the popularization movement in the lighting market, and it will face competition from competing products. The combination of these factors has led to a continued price decline in the LED lamp bead industry from the demand side, at least in the medium term (5 years).
On the other hand, from the supply side, the LED lamp bead industry has ended its key capacity expansion period, but the improvement in manufacturing maturity means the increase in the actual supply capacity of unit production lines. At the same time, technological progress, especially the progress of brightness technology, means the continuous improvement of the production capacity based on the total light output.
The combination of supply and demand will inevitably lead to structural overcapacity in the LED lamp bead industry. Continuously exploring new application markets is the need of all companies in the industry. Among them, the small-pitch LED display industry, which consumes huge amounts of lamp beads, is the best development direction. Since 2015, small-pitch LED lamp beads, such as 1 mm-sized products, have gradually realized the alternative development of local supply. In the future, products with sizes of 0.8 or smaller will also be supplied locally.
The core technical bottleneck of small LED lamp bead products is mainly reflected in stability. This requires a process of gradual improvement in process practice. In other words, when the process practice and demand scale of the entire industry reach a certain critical value, the price of small-pitch LED screen lamp beads is expected to drop significantly.
Factors that have a strong impact on the price trend of small-pitch LED screen products include, in addition to the advancement of lamp bead technology and price declines, technological advancements in PCB versions, advancements in surface-mounting processes and stable improvements in yield rates, advancements in defect repair technology, and declines in IC product prices, all of which constitute favorable factors for the continued decline in the price of small-pitch LED screens.
Seize the four major innovations, and the future of small-pitch LED will be unlimited
Among the various factors that affect the market development of small-pitch LED screen products, price is the most critical factor, but it is not the only factor. To make the small-pitch LED industry bigger and stronger, it requires continuous and comprehensive technological innovation.
First, seam indicators are still one of the key technical directions in the small-pitch LED screen industry. However, achieving lower seam indicators not only requires the efforts of terminal companies in the small-pitch LED screen industry, but also requires the strength of the upstream lamp bead market: only when smaller-sized lamp bead products achieve sufficiently mature, stable and large-scale mass production can the spacing control of small-pitch LED screens continue to develop. This market rule of upstream and downstream linkage determines that the development of small-pitch LED screens will inevitably require more time to develop products with smaller spacing. For example, in the future, 0505 lamp beads will be the main competitive point in the ultra-fine pitch LED screen industry below 1 mm.
Second, the advancement of defect rate technology. The lamp bead density of small-pitch LED screens is much higher than that of general LED application systems. In display applications, compared to general lighting, the tolerance for point defects is even lower. This actually leads to the fact that the core of small-pitch LED screen technology revolves around "point defects". In the preparation of small-pitch LED screens, PCB circuit boards, circuit board drilling, solder paste printing, chip insertion, patch welding, etc. will significantly affect its defect rate index. Through systematic industrial progress in materials, processes, repair technologies, etc., achieving lower costs, smaller probability of product defects, and higher long-life stability is the key to gaining market recognition for small-pitch LED screens in more fields.
Third, the development of comprehensive visual effects technology. This includes, for example, the development of 3D display technology, the development of anti-image graining optical technology, the development of effective color, brightness and contrast consistency, wide-range adjustment technology, as well as the development of driver IC, application functional computing IC and software design, etc., which are all good innovation directions for small-pitch LED screens.
Fourth, in terms of ultra-fine pitch products, the LED screen industry needs innovation across the entire industry chain. Including ultra-fine large-size printed circuit boards, circuit board hole-opening technology, solder paste printing technology and auxiliary metal shadow masks, patch insertion process accuracy, welding processes, ultra-high-density heat dissipation design, box assembly accuracy, screen assembly accuracy, driver IC adjustment design for bright lines and dark lines, etc. are all facing a huge "leap". It is even said that many equipment need to be "redeveloped", and many process details need to be explored for a long time. It can be said that ultra-fine pitch LED is the long-term development direction of LED screens, and it is also the difficulty of the industry. In the overall process chain of ultra-fine pitch products, except for LED lamp beads which are relatively mature, other aspects are facing technological innovation issues.
To sum up, small-pitch LED screens are still an emerging industry and application product, and there is still huge room for technological progress. Observing the market development of small-pitch LED screen products in the past three years, we can draw the conclusion that there is an inevitable synchronization process between price changes, market growth, and the advancement of mainstream product technical standards. That is, product prices will fall by 20%, market size will grow by 80%, and mainstream technical standards will jump by an order of magnitude (the seam index will shrink by 20%). In the future, in the small-pitch LED screen industry, the market scale will grow rapidly with technological advancement and cost reduction. The industry model will be established for a long time.
It is precisely based on such an industrial judgment, especially seeing that Chinese small-pitch companies such as Unilumin and Dongshan Precision have made great gains in the global market. At the 2016 INFOCOMM exhibition, international big names such as Sony, Samsung, Mitsubishi, NEC, Christie, and Daktronics either continued to expand the small-pitch LED screen market, or overturned the original industry judgment and resolutely joined this emerging field. In a sense, a global engineering display era of small-pitch LEDs has begun.
ANNA