A report from IHS recently claimed AMOLED panel production costs for smartphone displays was nearing LCD displays or translated into LED industry language ready to take out LED backlight, reported Phonearena.com and Korean media ETnews.

The market research firm claimed production costs for AMOLED and LCD panels for 5-inch full HD smartphones in the first quarter were down, respectively, to US$14.3 and $14.6. Costs of the two display technologies have fallen since fourth quarter of 2015, from $17.1 for AMOLED, and $15.7 for LCD, making it appear AMOLEDs are ready to substitute LCD displays from low to high-end models. Previously, OLED displays were mostly found in high-end smartphones.

Explanations behind the plunging AMOLED production prices include increasingly matching the costs of LTPS LCD were high rate of operation, Samsung’s broadened customer range, and end of depreciation of production lines.

Samsung Display, the largest AMOLED smartphone display vendor, had been expanding its small and medium sized panel production since second half of 2015. The company has also realigned its AMOLED display strategy, by decreasing its dependence on the group’s flagship Samsung Galaxy smartphones to expanding deals with major Chinese smartphone makers. This has scaled up its operation rates to 90%-95%, reported ETNews.

The Korean manufacturers 5^th and 6^th generation OLED production lines average rate of operation capacity is at 80%, said Kim Hyun-jin who is a top researcher from IHS Technology. “If rate of operation is kept at 95%, a business can reduce production cost by about 16% than when rate of production is at 70%.”

Moreover, the company’s cost of depreciation has reduced over the past five years since its AMOLED production line was established, which was another reason cited for the declining manufacturing costs. In addition, Samsung Display is expanding its OLED production capacity following the construction of its A3 line, which is projected to further lower AMOLED panel costs.

“Even though depreciation of LCD line is over, structure of cost of AMOLED is still more advantageous.” said Kim. “It has set up bases that will allow AMOLED to be used also for inexpensive products as well as premium products.”

Chinese smartphone vendors are also applying AMOLED panels in premium and middle ranged products.

The industry predicts smartphone companies will speed up replacement of LCD panels with AMOLED panels, due to decreasing production prices. The added values of using OLED screens in smartphone backlight would be the flexibility it offers in phone form design breaking free from the rigid rectangular design, such as the foldable phone patent Apple  filed recently. Phones could also become lighter and much thinner. If phone makers could use or make paper thin OLED displays similar to the OLED TV display showcased by LG Display at CES 2016.

From the consumer end, OLED screens could reduce eye strain (since it does not emit blue light), while providing higher saturated colors. For instance, you probably would not need a yellow-tinted anti-blue light screen film on phones, or special anti-blue light glasses for eye-health concious users.

It can be foreseen that material industries and existing backlight technology suppliers will be affected by rise of OLED screens in electronic devices, such as smartphones in the near future. But will the timeline be as soon as IHS predictions? LEDinside does not know for sure.

What we can be certain is LED companies that have large revenues from smartphone backlight applications need to brace themselves for the upcoming changes, and find alternative technology and product applications to secure income.