In this video, I want to talk about Apple's latest technology plaything:
the mini-LED panel in the 2021 model of the 12.9 inch iPad Pro.
The reviews on the iPad have invariably noted how nice the display looks. And it appears that
the technology is mooted to show up in some of Apple's other products as is their tendency.
Tech publications like Linus Tech Tips and the Verge have talked about what makes mini-LEDs
special. Definitely check those out too. But in this video, I want to take a look at the company
supplying this interesting technology. One of the world's biggest LED vendors,
Hsinchu-based Ennostar Group.
LED-backlit LCDs use LED backlights to shine light through the LCD (formal name TFT-LCD),
which carries the image. Note that the LEDs are not acting as the pixels
themselves. They are merely providing the light which comes out through the final
LCD. LEDs aren’t small enough yet to serve as the pixels themselves.
Current iPads use this type of screen. Mini-LEDs are a refinement on this concept.
In a mini-LED screen, you vastly increase the number of backlights.
And then arrange and synchronize them into dimming zones. Sophisticated control
circuitry is created to control all of the backlights uniformly and efficiently.
This dimming zone system means that different areas light up or darken
depending on the image characteristics. So dark colors can be actually dark.
For this reason, these panels can offer amazing contrast ratios, better refresh rates, and more.
Manufacturing-wise, they can be made in the same fabs as traditional backlit LCDs but with some
incremental improvements. But at the same time, because of the sheer number of LED backlights,
more wafers and dies have to be made for each new iPad.
Thus, this new technology can get quite pricey. Teardowns of the new iPad Pro
find that the LCD backlight by itself is one of the tablet's most expensive components.
Estimated to cost $90 per iPad, it takes up nearly 20% of the iPad's entire component cost.
It is expensive, but the results are stunning. So
let us take a look at the company that developed and supplied it, Ennostar.
Ennostar Group is an interesting company in that it is actually made up of two companies:
Epistar and Lextar. They “merged” in January 2021,
exchanging both companies’ shares for shares in this one holding company. I add the quotes
because, per their announcement, they are together but operating separately. It’s complicated.
Founded in November 1996, Epistar is one of Taiwan's biggest LED suppliers. Prior
to the merger they had been a fully integrated manufacturer. This means they develop the crystal,
wafer, and die. And they package it all into modules for delivery to the LED application user.
Its founders had worked at ITRI, the Taiwanese public-private partnership that famously spun
off TSMC many years earlier. Taiwanese firms had been working in the downstream LED industries ever
since the 1970s, with Lite-On Technologies being a Taiwanese LED packaging and module pioneer.
The industry quickly looked for a way to climb up the value chain,
afraid of always being stuck on the bottom levels. They found their opportunity when
ITRI developed a new technology called transparent indium tin oxide or ITO.
At this period of time, thin metal was used as a substrate for creating LEDs.
This way of doing things however hindered how bright LEDs can be. ITO offered a better approach.
ITRI founded and spun off Epistar to refine this technology and bring it to the market.
The company did not turn a profit for the first six years of its existence,
but it soon developed red LEDs that were substantially brighter than what was available.
From there, the company established itself as one of the leaders of the LED industry.
It is another interesting story of a Taiwanese high tech industry climbing
the value chain up from a low-level process. Today, Epistar holds over 4,400 LED patents,
including many of the patents surrounding core upstream aspects of mini-LED technology.
Lextar had been another Taiwanese vertically integrated LED firm. They were established in
2008 as a subsidiary of AU Optronics, one of Taiwan's biggest LCD display makers.
Their product specialities are in displays and automotive applications.
For instance, the lamps that go into car headlamps and what not.
Lextar has been developing their own mini-LED technology,
demonstrating a 2.9 inch mini-LED panel in 2019 with over 2,300 dimming zones.
The panel can reach up to 30,000 nits. So all in all, good technology. There was just a lot
of overlap with what other Taiwanese companies like Epistar were doing in the industry.
The Americans and Japanese had been leaders in the industry with companies like Cree
and Nichia inventing many core fundamental LED technologies and patenting them.
European firms Osram and Philips also had founding roles here.
Taiwanese firms like Epistar then entered the market and flourished.
But they were quickly joined by the Koreans and the Chinese.
Many of these new LED suppliers are allied with larger, vertically integrated electronics
conglomerates like Sharp, Sony, or Hitachi. This means they do not necessarily have to make money.
I talked a bit about this in my video about BOE Technology.
What this means is that the LED industry is seeing substantial overproduction in the space. It sucked
profits out of the industry and negatively impacted the Taiwanese LED industry as a whole.
Even TSMC found itself unable to compete here. In 2015, they sold their LED foundry operations
to Epistar. This has been a long term trend in the industry and these market forces have not let up.
The brutal industry conditions continued into 2019. Epistar 2019 revenues declined 27%
from 2018. They made $15 billion NTD in revenue, about $575 million USD. Losses were almost a fifth
of that revenue - $3.9 billion NTD or $140 million USD. Their gross margins that year were negative.
Lextar generated revenues $9 billion NTD in 2019, about $323 million USD,
but posted a $310 million NTD loss or $10 million USD. Their gross margins that year were 9%.
With the economic situation the way it is,
it makes a lot of sense for these players to consolidate and get bigger.
The two companies had both been vertically integrated. That won’t be the case anymore.
Once part of Ennostar, Lextar will focus on the downstream operations of LED manufacture.
This means putting together the various LED components
into finished mini-LED and micro-LED modules. Epistar would handle the up and middle-stream,
creating the wafers and the individual dies or grain.
The merger would also allow them to focus their dual mini-LED and micro-LED
development efforts - a key future growth industry and source of high end margins.
It would also bring some of Lextar's critical customers like AU Optronics and Cree Inc to
Epistar's upstream business. And it might allow them the chance to supply panels to
Samsung Electronics, as AU Optronics has been a Samsung supplier for a while now.
I would be remiss not to mention some of the other suppliers for this iPad.
According to Bloomberg, General Interface Solution Holding Ltd. and Taiwan Surface Mounting
Technology Corp. are some of the other key providers of the iPad Pro's display technology.
These are some obscure names. I consider myself pretty familiar
with the Taiwanese electronics industry, and even I have never heard of these companies.
General Interface Solution Holding or GIS in Miaoli provides the touch
technologies behind all sorts of touch screens.
That includes the cover glass, the touch sensors, and the LCD display modules.
Taiwan Surface Mounting Technology in Taoyuan does liquid crystal display surface-mounting. This is
a complicated process that solders electronics components directly onto a printed circuit board.
That actually sounds kind of interesting and I wonder how they apply it to LCD screens.
But for a future video, we shall see.
Another interesting name that came up during the latest supplier checks is ATL, who provided the
iPad Pro's battery. I did a video about their spinoff CATL, which provides EV batteries.
For all the nice reviews about the iPad, I guess mini-LEDs aren't really making a huge wave just
yet in the consumer technology space. I reckon that people are more stoked about micro-LEDs
and are probably already looking ahead to when those can start appearing on people's shelves.
And that kind of makes sense. The commercialization of Micro-LEDs allows
for brand new form factors and opens up new experiences in things like virtual reality.
Imagine what new consumer products might come down the pike when that is ready!
But all of that is more than a few years away. In the meanwhile, mini-LEDs have a
lot to offer. They deliver a beautiful image that rivals the very best that OLEDs can do.
There is a rumor that says that the next mid-range iPad Airs are going
to have OLED screens while the next big MacBooks Pros will have mini-LED screens.
I think that positioning, mini-LED as the high-end and OLED as the middle-end,
is real interesting and, assuming those rumors turn out to be true,
demonstrates the potential that mini-LEDs have for the future. They can deliver high dynamic range
and color on par with OLED while offering more brightness and less risk of burn-in.
As for Ennostar. Today, the company holds 12% of global LED chip capacity.
Crucial scale in an increasingly competitive industry where scale matters a whole lot.
Snagging Apple's business demonstrates their technology lead. For now,
anyway. But there is still too much competition in the LED space.
Companies in South Korea, Europe and China are expected to catch up as soon as
2022 - with giant San'an Optoelectronics being the most worrisome competitor.
Ennostar has to continue innovating and investing in R&D,
namely micro-LEDs, to keep Apple's business and push the display industry forward.