The author is an analyst of NH Investment & Securities. He can be reached at midas.sohn@nhqv.com. — Ed
Demand for ELB equipment, which is used to block light leakage from punch holes, should remain solid, as the scope of application for the punch hole design expands to include tablets. Panel makers are showing keen interest in 8th-generation OLED displays, and OLED panels are being adopted in a growing number of IT devices. In line, HB Solution, a supplier of front-end process equipment to domestic and Chinese display makers, is expected to win more new orders going forward.
Increasing adoption of punch hole design to boost demand for ELB equipment
HB Solution’s main post-fab equipment is edge light blocking (ELB) equipment, which is used to block light leakage from punch holes. HB Solution is the world’s only manufacturer of ELB equipment. While other display equipment makers have posted weak earnings due to a lack of investment at clients, HB Solution recorded 2022 sales of W187.6bn and OP of W27.1bn, thanks to ELB equipment sales growth. Last year, ELB equipment sales were estimated at roughly W120bn, accounting for 64% of the firm’s total sales.
Punch holes have become a mainstream display design for smartphones, and moving forwards, the punch hole design is expected to be more widely adopted for tablets and notebooks. In line, ELB equipment orders should rise steadily at HB Solution. We forecast the firm’s 2023 ELB equipment orders at W95bn.
Greater OLED panel application to translate into rising inspection equipment orders
HB Solution also manufacturers front-end inspection and measurement equipment, which are used to examine the quality of display panels during the evaporation and encapsulation processes, and to inspect the quality of finished cells prior to the module process. The firm supplies its front-end equipment not only to domestic display companies but also to Chinese makers.
Panel manufacturers are showing keen interest in investing in 8th-generation OLED displays, as OLED panels are: 1) increasingly being adopted in a range of IT devices, including smartphones, tablets, laptops, automotive electronics, and XR headsets; and 2) highly likely to be used in the new iPad Pro series scheduled for release in 2024. New investments in OLED displays should benefit HB Solution. In line, the firm’s new orders, including those for front-end process equipment, are expected to reach W205bn in 2023.
