Counterpoint predicts that the global foldable smartphone market will grow by 52% YoY to 22.7 million units this year. By 2027, the global shipment volume of foldable smartphones is expected to exceed 100 million units. Research from China International Capital Corp (CICC) also indicates that the upgrade of foldable products will accelerate in 2022, and the global shipment volume of foldable smartphones is expected to reach 80 million units by 2025.

Jene Park, a senior analyst at Counterpoint, said, "In the long run, we are keeping an eye on Apple's performance. We believe that Apple may launch its first foldable iPhone in 2025, which could bring new growth to this segment market."

Decreasing costs are key to fast growth of foldable smartphones

When it comes to foldable screens, the first reaction of most people is that they are expensive. Indeed, larger screens, lower yield rates, and higher costs contribute to the high prices of foldable screens. An insider of mobile phone industry told TMTPost App that price is always the most important factor for users when purchasing a phone.

The slow growth of the foldable smartphone market was mainly due to high prices. Even high-end users hesitate when ordering phones that cost tens of thousands of yuan. A supply chain analyst revealed that small foldable screens cost hundreds of yuan more compared to flat screens. In contrast to the latter, foldable screens require improvements in materials, film materials, structures, and stress control.

Unlike phones with flat screens, foldable screens require higher in screen component and additional technologies such as foldable cover plates and hinges, which also increase the cost. A technician from BOE told TMTPost App that the technical difficulties of foldable phones lie in overcoming the highly frequent bending of the screen and the short lifespan of the hinge, as well as issues such as the thickness of the screen assembly, battery life, and software compatibility.

With the improvement of supply chain, there are better solutions for cover plates and hinges based on the requirements of enhanced hardness and durability of foldable screens. For example, BOE's research and development of water drop-shaped technology has reduced the bending radius of the folding area, allowing for over 200,000 folds. The water drop design naturally brings the upper end of the screen closer, providing great convenience for controlling the overall thickness of the device, saving space and ensuring battery capacity.

In terms of the cover glass that affects folding marks and screen lifespan, its material has evolved from the initial CPI film to UTG ultra-thin glass, further enhancing screen protection. In addition to improving the quality and eye protection capabilities of foldable screens, screen manufacturers have also made significant efforts to reduce power consumption and improve battery life.

As overall technology continues to mature and the yield rate and the rate of capacity utilization improve, the panel prices, the main contributor to cost of foldable smartphones, continue to decrease. According to data from DSCC, the overall price of foldable panels was around $130 in 2020, and it is expected to decrease by half by 2024.

Currently, the cheapest lengthwise folding products are priced at around 3,000 yuan. Zhao believes that the price of lengthwise folding phones should be around 3,000 yuan, and that of widthwise folding ones should be around 5,000 yuan. It is expected that within a relatively short period of time, the number of foldable smartphones will exceed 50 million in the market. This is not a high probability event, but a certainty, and it may even exceed 100 million units. By then, the overall appearance of foldable smartphones, and even the entire smartphone industry, will undergo fundamental changes.

Another upgrade of the domestic supply chain

The folding smartphones meet the needs of consumers in different scenarios. The brand new technological specifications and higher requirements also represent an upgrade and breakthrough of the domestic supply chain.

The supply chain of foldable smartphones in the early stage of its development was mainly based overseas. However, with the rise of domestic foldable smartphones, China’s local supply chain companies have also accelerated their expansion.

In terms of cover materials, UTG has gradually replaced CPI as the mainstream in the foldable screen market. Relevant statistics show that UTG's penetration rate in foldable smartphones reached 86.3% in 2022, and it is expected to exceed 93% by 2023, gradually replacing CPI. Currently, UTG technology is mainly dominated by foreign manufacturers such as Schott and Corning, with the former holding a market share of 47% last year.

However, domestic manufacturers such as Triumph Science and Technology and Wuhu Token Science are also accelerating their growth rate. CICC pointed out last year that domestic UTG manufacturers are expanding their capacity and transitioning from secondary thinning processing to one-time forming. At the end of July, Triumph Science and Technology stated on the investor interaction platform that the company's UTG has shipped small batch orders and has been applied to related terminal phones. At the same time, the company is also fully cooperating with multiple customers to accelerate the further marketization of UTG and related products.

In early June, Wuhu Token Science replied to investors that vivo x flip, which carries the UTG product of the company's subsidiary Toshin Optronics, has been launched. Toshin Optronics is the first Chinese mass producer of UTG to carry domestic foldable phones. The company has sufficient technical expertise in the UTG field and has deep cooperation with domestic major mobile phone customers including OPPO.

Companies such as Genies Technology are attracted to seek advancement in the hinge technology. Among them, Genies Technology has supplied hinges to Samsung, Huawei, and Xiaomi. On the investor interaction platform, the company also stated that it currently has the research and development and mass production capabilities for MIM parts and overall hinge assembly for folding screen phone axes (hinges), and has supplied phone axes (hinges) made of MIM parts and phone axes (hinges) to Android-based top customers of folding phones.

As the core of foldable screens, Chinese screen panel companies are rapidly rising. Currently, Samsung ranks first with its advantages in terminal sales. Similar to the development of LCD and other panel technologies, new technologies in the early stage were mostly controlled by foreign manufacturers. Later, thanks to the technological upgrades and the support of domestic mobile phone brands, BOE, Visionox, TCL CSOT, and other panel manufacturers have grown rapidly.

Among them, BOE has become a part of the Apple supply chain since the release of iPhone 12 and has become one of Apple's three major flexible screen suppliers alongside Samsung and LGD. Recently, there have also been reports that Tianma Group is expected to become a second-tier supplier for the iPhone SE4.

The efforts of domestic panel manufacturers can also be seen from the changes in the market share of AMOLED panels in the smartphone market. According to data from CINNO Research, in the first quarter of this year, the shipments of domestic manufacturers' AMOLED smartphone panels increased from 22.6% last year to 37.8%.

Among them, the shipment volume of BOE's AMOLED smartphone panels is approximately 30 million pieces, a year-on-year increase of 68.4%, ranking first in China and second in the world. The expected annual shipment target for flexible AMOLED is over 120 million pieces. The shipment volume of Visionox's AMOLED smartphone panels is approximately 10 million pieces, a year-on-year increase of 550%. In contrast, Samsung's market share has dropped by nearly 20%.

TMTPost App has compiled a list of suppliers for foldable smartphones in the past year. It can be seen that Samsung is still dominant in the market, but more and more brands are starting to use domestic panels. Among them, BOE has applied flexible OLED display technology to many high-end flagship models at home and abroad, such as the vivo X Flip released in April this year and the Magic V2 launched by Honor in July, which has a folding capacity of over 400,000 times.

Visionox has reduced the thickness of the lower border area of the Honor Magic V2 through Padbending R and optimized the border routing design to achieve a narrower lower border. TCL CSOT supplies screens to Moto, bringing the initial price of foldable screens to less than 4,000 yuan.

According to the investor relations activity record disclosed by Tianma Microelectronics, with the advanced completion of the company's latest AMOLED production line TM18, the first batch of products has been shipped to major industry brands. The company will consider producing folding and HTD screens mainly on the TM18 production line, and is expected to have mass production capacity in 2023 and launch related folding and HTD products.

CICC pointed out in the report that driven by the demand for cost reduction, domestic manufacturers are stepping up their efforts in screen module manufacturing. It is optimistic that more domestic manufacturers will participate in the supply of foldable smartphone panels under the trend of mature technology and reduced cost.

An industry analyst revealed to TMTPost App that Samsung's screens for domestic brands are not the best, and in the future, domestic screen manufacturers will occupy more market share with the improvement of display performance and low costs.

It is worth noting that the battle for foldable screen panels is also a hidden war among domestic screen manufacturers. In addition to technological competition, reducing costs and deploying them on more terminal devices have also become key factors in the competition.

The analyst pointed out that the lower price of the lengthwise folding smartphones contributes to sales increment for foldable screens this year, and it is also a key product line for a certain domestic brand to seize market share. It is not ruled out that the next generation of its products will use domestic screens, and it is currently weighing between display performance and costs.

The competition in the foldable screen terminal and supply chain has just begun, and with the acceleration of domestic substitutes, Chinese brands will eventually take the lead. Going from zero to 20 million unit is just a small step, and there are still many issues that need to be solved and improved for foldable screens, such as creases, which can currently only be minimized but not eliminated. The competition for screen panels is also the same. Apart from replacing Samsung, domestic screen manufacturers are also stacking up against each other, which is also the only way to become the top brands.

 (This article was first published on the TMTPost App, Author/Du Zhiqiang, Editor/Zhong Yi)

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