Amid greater product diversity and form-factor changes for IT set products, we expect DRAM makers to limit their DRAM investments, resulting in better supply-demand conditions for the industry. Given expectations that SSD demand will expand considerably, we expect the NAND supply to be tight. Meanwhile, we expect: 1) LCD TVs as well as other applications (eg, monitors and tablets) to gradually adopt larger-sized display panels; and 2) demand for flexible OLED panels to grow significantly.
2017 changes: Semiconductor market conditions to improve; flexible OLED panel demand to grow dramatically
Looking at 2017, the semiconductor industry should see tight DRAM/NAND supply due to unbalanced supply conditions. Meanwhile, the display industry will likely witness a sharp climb in demand for flexible OLED panels.
Semiconductor industry: We expect DDR4 data transfer speed and higher SSD demand to improve. In line with likely increasing demand for both DDR4 and SSD, the number of related test processes should climb.
Meanwhile, considering unbalanced production (limited investment in DRAM capacity and low 3D NAND production yield), the DRAM and NAND supply is likely to be tight.
: While likely to be constrained in 1H17, the LCD supply volume should rise significantly in 2H17. Meanwhile, we forecast that demand for flexible OLED panels will increase at a rapid paces.Top picks: SEC, SK Hynix, and LG Display
(SEC): The electronics giant’s strengthening competitiveness in 64-layer 3D NAND should lead to improvements in its earnings figures. Moreover, supported by its flexible display technology acumen, we expect SEC to release a foldable smartphone in 2017. SK Hynix
: Earnings at SK Hynix’s DRAM division should enhance in response to product diversification (in terms of data transfer speed) and the release of new products (including LPDDR4X).LG Display
(LGD): In keeping with anticipated LCD industry changes, we forecast that LGD will see earnings growth in 2017. Moreover, we view the firm as having secured a mid- to long-term earnings growth driver thanks to its investments in OLED lines (large and small- to mid-sized panels).
Likely beneficiaries: Uni-test (DDR4 testing), Exicon (SSD testing), Leeno (test sockets), ISC (test sockets), Duksan Neolux (OLED materials), and YMC (OLED targets).