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瑞信-亚太地区-科技行业-台湾显示器行业:指纹传感与3D传感更受欢迎-213-25页.pdf
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瑞信-亚太地区-科技行业-台湾显示器行业:指纹传感与3D传感更受欢迎-213-25页.pdf
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DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST
CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit
Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report
as only a single factor in making their investment decision.
13 February 2019
Asia Pacific/Taiwan
Equity Research
Technology
Taiwan Display Sector
SECTOR FORECAST
Research Analysts
Jerry Su
886 2 2715 6361
jerry.su@credit-suisse.com
Harvie Chou
886 2 2715 6364
harvie.chou@credit-suisse.com
Under-display fingerprint-sensing becoming
more popular than 3D-sensing
Figure 1: Android smartphone display roadmap
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
In-cell TDDI touch
Full screen
Full screen with COF packaging
for TDDI
Full screen with notch
Full screen but replace notch
with hole
1/4 or 1/2 under-display
fingerprint sensing
Full screen fingerprint sensing
2017
2018
2019
2020
Source: Company data, Credit Suisse research
■ Android shifting toward under-display fingerprint-sensing. We believe
under-display fingerprint-sensing will become the mainstream biometric
identification method for high-end Android smartphones by 2019-20. The
proliferation of front-facing 3D-sensing in Android will remain slow given
higher bill-of-materials (BOM) costs (US$20 vs ~US$5 for under-display
fingerprint), lack of other use besides unlocking devices, and the trend of
removing the notch for greater viewable area. We estimate under-display
fingerprint shipment growing from 30 mn units in 2018 to 185 mn units in
2019, with 135 mn/50 mn for optical-sensing/ultrasonic sensing. By 2020-
21, the industry could shift to new structures for half- or full-screen-sensing.
■ ToF rear-camera to emerge. We expect more Android brands to launch
time-of-flight (ToF) rear-camera in 2019, although there are doubts on cost
and end-applications. We don’t expect iPhone to adopt ToF camera in
2H19 models (we think this should happen in 2H20) and under-display
fingerprint-sensing. We think there is a chance for iPhone to replace Face
ID with full-screen in-display or under-display fingerprint by 2H20 or 2H21,
which could pose significant risk for existing Face ID supply chain.
■ Remain positive on Egis and Chroma. We believe Egis is seeing good
progress in non-Samsung smartphones for optical under-display fingerprint.
We lift its TP to NT$310 (from NT$215) on higher shipment assumption.
We also lift Chroma's TP to NT$160 (from NT$150) as it should continue to
benefit from Vertical Cavity Surface Emitting Laser (VCSEL) wafer-testing
capacity-builds for both front- and back-3D-sensing and better growth in
electric vehicle (EV)/solar turnkey businesses, while new partnership with
Camtek could drive its semiconductor revenue growth 2020 onward. We
stay conservative on Win Semi on slower handset demand, rising
competition in VCSEL wafer, and limited contribution from 5G in 2019. We
believe the market has been over-excited about its 5G story.
13 February 2019
Taiwan Display Sector 2
Focus charts and tables
Figure 2: Full-screen display seeing strong growth
Figure 3: Optical under-display shipment taking off
0%
20%
40%
60%
80%
100%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2015 2016 2017 2018E 2019E 2020E
mn units
Full screen panel Total smartphone panel
Penetration (RHS)
0%
5%
10%
15%
20%
-
200
400
600
800
1,000
1,200
2015 2016 2017 2018E 2019E 2020E
mn units
Optical under-display sensing Total fingerprint sensing
Penetration (RHS)
Source: Company data, Credit Suisse estimates
Source: Company data, Credit Suisse estimates
Figure 4: Prototype with 1/4 screen under-display
fingerprint-sensing (Oppo)
Figure 5: Egis’ product roadmap
2019 2020 2021 2022
Under OLED (small area)
Under OLED (large area)
Under OLED (full screen)
In-cell OLED/LCD (full
screen)
Source: Company data
Source: Company data, Credit Suisse research
Figure 6: Android smartphone makers' progress in 3D-sensing
Source: Company data, Credit Suisse research
Figure 7: Earnings estimates and TP revisions
Source: Company data, Credit Suisse estimates
13 February 2019
Taiwan Display Sector 3
Under-display fingerprint-sensing becoming
more popular than 3D-sensing
We believe under-display fingerprint-sensing will become the mainstream biometric
identification method for high-end Android smartphones in 2019-20 as smartphone brands
seek to further increase the viewable area on device and remove the notch design, as well
as OLED panels become more affordable with new suppliers joining the supply chain.
Among the two technologies for under-display fingerprint-sensing, we see more adoption
of optical sensing over ultrasonic sensing on cost concern. We estimate under-display
fingerprint shipment to grow from 30 mn units in 2018 to 185 mn units in 2019, with 135
mn for optical sensing and 50 mn for ultrasonic sensing. By 2020-21, we think the industry
would shift to new structures for half- or full-screen-sensing.
We also believe the proliferation of front-facing 3D-sensing for biometric identification will
remain slow in 2019-20, given higher BOM cost and lack of other uses besides unlocking
the device. Nevertheless, there will still be few new smartphone models adopting front-3D-
sensing in 2019, as well as potential adoption for non-smartphone applications such as
cleaning robot, smart doorbell, refrigerator, etc.
For the rear-3D-sensing with ToF camera, our checks indicate several Android
smartphone brands have been developing this feature and could see a few flagship
models adopting this in 2019, although there is doubt regarding the cost and end-
application. However, we do not expect iPhone to adopt ToF camera in 2H19 models (it’s
more likely to happen in 2H20), based on our checks on equipment delivery, supplier
qualification, and capacity-build plans. We also do not expect 2H19 iPhone to adopt
under-display fingerprint-sensing as there has been limited activity in the supply chain.
In terms of stocks, we remain positive on Egis and Chroma, NEUTRAL on Himax and
VPEC, while staying cautious on Win Semi. We believe Egis is seeing good traction on its
optical under-display fingerprint solution for Chinese and Japanese smartphone brands,
while the gross margin profile could sustain at a higher level given limited competition from
new-entrants. We believe Egis' gross margin should see a sharp recovery in 2019, thanks
to the increasing mix of optical fingerprint-sensing. We expect Chroma's VCSEL wafer and
burn-in testing tool shipment to grow in 2019, given the pull-in by both Apple and Android
makers, as well as growth from EV, solar turnkey, and semi SLT businesses.
We remain conservative on Win Semi given the slower handset demand and increasing
competition from new entrants for both Apple and Android supply chain, which will further
impact its ASP and margins. We also think the market is overexcited about its 5G story.
We remain NEUTRAL on Himax and VPEC but would monitor their progress on new
customer wins for optical components (Himax) and epitaxy wafer (VPEC) to turn more
constructive.
Androids turn more aggressive on under-display
Our supply chain research indicates Android smartphone brands are turning more
aggressive in adopting under-display fingerprint-sensing, instead of 3D facial recognition,
as they aim to increase the viewable area of the smartphone, not to mention 3D-sensing
has much higher BOM cost than under-display fingerprint-sensing and the requirement of
cutting a notch on the display panel. Several smartphone brands like Oppo and Vivo also
released their pop-up designs for the front-camera since 2H18; while panel makers are
developing panels with hole design, instead of using the notch, for introducing under-
display front-camera in 1H19. We estimate full-screen display penetration to reach 85% in
2019 and 90% in 2020, up from 12% in 2017 and 66% in 2018.
We believe smartphones moving to full-screen and replacing notch with drilled-hole design
will limit the adoption of 3D facial recognition at Android makers, despite all three new
iPhones and iPad Pros having adopted 3D-sensing as their only biometric sensing method
Android smartphones
turn more aggressive
on under-display
fingerprint-sensing
ToF for iPhone is more
likely a 2H20 event
Remain positive on
Egis and Chroma
Stay conservative on
Win Semi
Smartphone brands are
developing pop-up
camera and replacing
notch with hole to
increase viewable area
13 February 2019
Taiwan Display Sector 4
in 2H18. We expect most of the high-end Android smartphones to be launched in 2019 to
adopt under-display fingerprint-sensing, while only few models will be equipped with 3D
facial recognition. We think Huawei, Samsung, and Google Pixel might have some new
models adopting 3D facial recognition but the overall volume will be less than that of
under-display fingerprint-sensing.
Figure 8: Android smartphone display roadmap
Figure 9: Full-screen display seeing strong growth
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
In-cell TDDI touch
Full screen
Full screen with COF
packaging for TDDI
Full screen with notch
Full screen but replace
notch with hole
1/4 or 1/2 under-
display fingerprint
sensing
Full screen fingerprint
sensing
2017
2018
2019
2020
0%
20%
40%
60%
80%
100%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2015 2016 2017 2018E 2019E 2020E
mn units
Full screen panel Total smartphone panel
Penetration (RHS)
Source: Company data, Credit Suisse research
Source: IHS, Credit Suisse estimates
In terms of product segmentation, we believe flagship and high-end smartphone will be
using OLED displays, while mid-end devices will stay with LCD panels. Under-display
optical fingerprint-sensing, no matter it is ultrasonic, optical CIS, or the under-developing
photo-sensor on glass, can only work on OLED panels. 3D facial recognition is only limited
to the flagship models given higher material and production cost. However, as smartphone
brands aim to narrow the notch width, introduce pop-up camera, or replace notch with hole
design to house front-camera to meet consumer's full-screen demand, this would further
limit the proliferation of 3D facial recognition in Android devices.
Figure 10: Smartphone front camera shifting to pop-up or hole-design to increase display viewable area
Vendor Huawei Google vivo Oppo Huawei Huawei Samsung Hisense
Design Notch Notch Pop-up Pop-up Pop-up Hole Hole Hole
Model Mate 20 Pro Pixel 3XL NEX Find X Honor Magic 2 Nova 4 A8S U30
Screen size 6.39" 6.3" 6.39"
6.42" 6.39" 6.4" 6.4" 6.3"
Display type OLED OLED OLED OLED OLED LCD LCD LCD
Retail Price
US$410
(RMB2,799)
US$899
US$575
(RMB3,898)
US$735
(RMB4,988)
US$550
(RMB3,799)
US$450
(RMB3,099)
US$440
(RMB2,999)
n.a.
Source: Company data, Credit Suisse research
Under-display fingerprint-sensing taking off in 2019
Fingerprint-sensing proliferation on smartphone started in 2013 as Apple integrated touch
ID with capacitive fingerprint sensing on iPhone 5S and it took four years (until 2017) for
fingerprint-sensing to become the standard feature on mainstream smartphone models.
Capacitive fingerprint-sensing has now been commoditised, as expected (click here) and
the smartphone industry has been looking for new technologies for biometric identification,
such as iris-scanning, facial recognition (2D/3D), under-display fingerprint-sensing
(ultrasonic and optical), multi-finger fingerprint-sensing, etc.
At MWC Shanghai 2016, Qualcomm worked with LeTV and introduced its first-generation
ultrasonic under-display fingerprint solution but volume has not taken off due to weaker
performance and higher BOM cost. Apple has also been working on its own under-display
fingerprint-sensing solution but didn’t launch the product in 2017, which we believe is also
13 February 2019
Taiwan Display Sector 5
due to weaker performance. Instead, Apple adopted structured light 3D-sensing Face ID
on iPhone X in 2017, and all new iPhone models have now replaced Touch ID with Face
ID. However, we think Face ID's user experience, cost structure, security level (has issues
for identifying twins) are still not as attractive/intuitive as Touch ID.
Chinese smartphone maker Vivo is the most aggressive Android maker adopting under-
display fingerprint sensing. Besides Qualcomm's ultrasonic solution, it has also tried
optical-sensing solutions from Synaptics and Goodix. Nevertheless, Vivo has decided to
widely adopt optical under-display technology in 2018, with Goodix as the major supplier.
Other brands such as Oppo, Xiaomi, and Huawei have also launched several high-end
models since 2H18 with optical under-display solution, while Samsung will also adopt
optical under-display solution for its mid- to high-end A-series.
For Samsung's flagship Galaxy S10 that will be launched in late February 2019, we
believe the two higher specification ones will adopt Qualcomm's second-generation under-
display ultrasonic sensing solution, while the lower specification one will adopt Egis'
capacitive fingerprint solution integrated with the power button.
Figure 11: Goodix is the main supplier for optical under-display fingerprint solution
Vendor vivo vivo Xiaomi Oppo Huawei OnePlus Meizu
Model X20+ X21 Mi 8 RX17 Pro Mate 20 Pro 6T 16X
Screen size 6.43" 6.28" 6.21" 6.4" 6.39" 6.41" 6.0"
Solution provider
Goodix/Synaptics Goodix/Synaptics Goodix/Synaptics Silead Goodix Goodix Goodix
Retail Price
US$530
(RMB3,598)
US$310
(RMB2,098)
US$440
(RMB2,999)
US$635
(RMB4,299)
US$885
(RMB5,999)
US$549
(RMB3,399)
US$265
(RMB1,798)
Source: Company data, Credit Suisse research
We estimate under-display fingerprint sensing shipment to grow from 30 mn units in 2018
to 185 mn units in 2019, with 135 mn for optical sensing and 50 mn for ultrasonic sensing.
We believe optical under-display will outgrow ultrasonic under-display given lower
production cost (US$5-6 vs US$15), multiple solution suppliers (Goodix/Egis/others vs
Qualcomm), and better flexibility for selecting the processor. We believe majority of the
shipment of ultrasonic under-display fingerprint solution in 2019 will be for Samsung's
flagship models as Samsung has entered into a licensing agreement on the ASIC with
Qualcomm, while the Chinese brands will be adopting optical sensing solution.
Other than higher module cost, we believe using Qualcomm's ultrasonic fingerprint
solution requires to use its high-end processor or needs to have a standalone ASIC, which
makes the solution less attractive for Chinese brands. Moreover, ultrasonic fingerprint
sensing only works with flexible OLED panels, which will also limit the adoption due to
higher cost for flexible OLED and lack of stable alternative suppliers, other than Samsung;
not to mention issues on an adding protection layer on the OLED screen. Regarding
under-display fingerprint for iPhone, we do not expect 2H19 iPhone to adopt either
ultrasonic or optical sensing, as there have been limited activities in the supply chain.
Samsung is currently
the only one using
ultrasonic fingerprint-
sensing
Ultrasonic fingerprint is
less attractive for
Chinese brands due to
higher cost
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