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Innolux says Taiwan lacks state help to build OLED technology

Taiwan’s major panel-maker Innolux said the sector lacked government support.

TAIPEI -- Leading Taiwanese panel-maker Innolux said Wednesday that local companies cannot afford to compete with China and South Korea in building better and more advanced displays due to a lack of financial support from the government. 

Innolux Chairman and Chief Executive Wang Jyh-Chau was referring to the technology and capacity needed to create advanced organic light-emitting diode (OLED) screens, which may be used in iPhones next year. 

"Our competitors in China, backed by the Chinese government, can afford to lose money even if they eventually fail to produce OLED panels, but Taiwanese panel providers can not afford to fail and to lose that much money since we do not have the luxury of government support," Wang told reporters during a display tech expo in Taipei. 

Panel-makers in Taiwan, Japan and China are trying to catch up with Samsung, which is now virtually the sole supplier of OLED, controlling 95% of the global market. 

While Samsung has been using and supplying OLED panels for smartphones since around 2010, Nikkei Asian Review has learned that Apple Inc. will only begin to migrate to the new technology starting next year, depending on the South Korean tech titan for supply. 

Apple's decision to adopt the new technology is the key reason behind Asian panel-makers' frenzy in growing their OLED capabilities. Some Chinese smartphone-makers, including Xiaomi, have also started to offer devices with OLED display this year. 

Compared with the low-temperature poly-silicon (LTPS) panel technology current iPhone models use, OLED offers sharper color contrast. More importantly, OLED is flexible and allows companies to make curved screens like the ones sported by Samsung Galaxy S7 and Galaxy Note 7. 

Earlier this month, Taiwanese officials suggested that they were mulling the feasibility of setting up a national alliance of panel-makers so that local companies could pool resources to develop OLED technology, which requires a large amount of capital, without offering any concrete details. 

There has also been speculation about whether Innolux, an affiliate of key iPhone assembler Foxconn Technology Group, could join forces with embattled Japanese electronics conglomerate Sharp to work on OLED after Foxconn's takeover of the Japanese entity earlier this year. Foxconn has pledged 200 billion yen ($2 billion) to Sharp for investment in OLED technology as part of the takeover. 

Wang said that for now Innolux is open to any possibility. Innolux will only be able to provide OLED display for small-sized wearable devices starting next year, and it will ship OLED products for the automotive customers no earlier than 2020, according to Innolux Vice President Jeffrey Yang. 

Taiwanese President Tsai Ing-wen, middle, pledged her support Wednesday for Taiwan's panel sector at an industry event.

Taiwanese President Tsai Ing-wen attended the display expo on Wednesday morning to show her support for the development of next-generation technology. 

Chairman Paul Peng of AU Optronics, Innolux's key Taiwanese rival, said on Wednesday his company was aiming to develop OLED display for wearable devices, virtual reality gears, and the automobile market but it had no plans to enter the smartphone market yet. 

"President Tsai did show her support through her presence at the expo, but If Taiwanese government is really determined to help panel-makers in developing new display technologies, we hope to see some concrete plans," said Peng. 

Peng and Innolux's Wang voiced reservations about whether OLED would become the main display technology for smartphones, but a senior executive from Japan Display, a key iPhone LTPS panel supplier, disagreed. 

"We believe OLED panels would become the mainstream in smartphone sector in the near future, or in three to five years," Hiroyuki Ohshima, senior fellow at Japan Display said.

Paul Peng, chairman of major Taiwanese panel-maker AU Optronics said his company intends to make OLED displays but had no plans to enter the more competitive smartphone market.

Japan Display is slated to churn out OLED panels in 2018. 

Ohshima said smartphone-makers were eager to try out new types of display to differentiate themselves from competitors amid an overall market slowdown, and OLED's flexibility gives the new technology a distinctive edge over traditional screens. 

Chinese panel-makers including BOE Technology, Tienma Micro-electronics, Visionox, Everdisplay Optronics and China Star Optoelectronics Technology are all aggressively boosting their OLED production. 

The Chinese entities together hold around 3% of market share for 2016, according to research company IHS. Taiwan, on the other hand, only controls less than 1% as AU Optronics is the sole company shipping OLED.

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