PlayNitride founder, chairman and CEO Charles Li Credit: DIGITIMES

As PlayNitride is currently the sole company in the world to begin LED volume production, and there are industrial advantages in Taiwan, Taiwan has a chance to be a global leader in developing micro LED applications. This, however, hinges on PlayNitride's strategic cooperation with supply chain makers, according to Charles Li, Playnitride founder, chairman and CEO in a Digitimes interview.

Q: Following micro LED volume production, what is the current progress of commercializing micro LED?

A: Being an emerging display technology, micro LED should not be applied to certain products in the same way as LCD and OLED panels. Instead, it is necessary to consider how to use micro LED technology. There are many cases of killer application of micro LED under development.

Micro LED will see initial applications in large-size displays, followed by automotive displays, wearable devices and then AR devices. Market acceptance is the key driver of micro LED application in large-size displays, as many consumers can accept high prices for large-size micro LED displays.

When an OLED TV was sold at about US$10,000 in the past, annual global sales were about one million TVs. But OLED TV prices have dropped to US$5,000, and global sales may increase to five million units a year. Similarly, if current production cost for micro LED can be reduced by 95% in 2025, a micro LED TV is likely to be sold at about US$10,000. There will still be a high-end consumer group that can accept US$10,000, then there may be global demand for one million units per year.

Q: Are there opportunities of applying micro LED to automotive displays and AR devices?

A: Application of micro LED to automotive displays is in large-scale development. International automakers and electric vehicle startups are very interested in micro LED, with many ideas in discussion. Many have already signed NDAs (non-disclosure agreements) and cooperated with PlayNitride to develop desired applications.

Each desired application is confidential, and PlayNitride provides them with corresponding products including ultra-large micro LED displays, unique-shaped or flexible micro LED displays. They will unveil concept car models first and then adjust and modify designs in micro LED displays.

Along with booming development of Metaverse, international vendors are focusing on AR application, and thus become interested in micro LED technology. As AR glasses demand thinness and good display effects, optical waveguide technology is used to minimize lens thickness. But the technology entails the use of displays with very high brightness, and micro LED technology seems to become the only choice.

Q: As there is a development potential for micro LED, what are the situation of cooperation among upstream and downstream supply chain makers?

A: While PlayNitride initially developed micro LED technology on its own, large enterprises gradually stepped into micro LED as the technology matures, leading to formation of upstream and downstream supply chain makers.

However, PlayNitride faces a challenge: if it continues the independent development of micro LED technology, it is very difficult to make micro LED the basis of an industry.

Since many clients are worried if PlayNitride has a sufficient production capacity, PlayNitride considers cooperating with or licensing technology to large enterprises to capitalize on their production capacities. Since PlayNitride has many corporate shareholders, it needs to license or transfer micro LED technology to enterprises at an appropriate time, allowing micro LED technology to take root in large factories. Besides, micro LED cost reduction relies on advanced manufacturing capability.

Q: How do you view partnership with supply chain makers in Taiwan?

A: Among PlayNitride's corporate shareholders, the largest Taiwanese LED epiatxial wafer and chip maker Ennostar is an upstream supply chain maker, while TFT-LCD panel maker AU Optronics is a downstream one. PlayNitride has to consider how to capitalize on their large production capacities. PlayNitride will also closely cooperate with Samsung Electronics and other own-brand vendors, for they are crucial to application of micro LED.

PlayNitride hopes to play a role for designers and developers while keeping close connection with micro LED technology users, but this needs strategic partners' large production capacities to support design and development for micro LED commercialization. There are complete LED, LCD panel, semiconductor and driver IC supply chains in Taiwan, providing advantages for micro LED development.

If only PlayNitride undertakes micro LED volume production, micro LED market will be limited because the market size is closely related to the number of participants.

Through reasonable licensing or technology transfer, micro LED production cost can be gradually decreased and thereby production can be increasingly expanded. Consequently, micro LED market is likely to take off 2-3 years after.

Q: What is the capital expenditure plan in the future?

A: If PlayNitride continues capital investment on its own, the capital expenditure is estimated to exceed NT$10 billion (US$334 million) and return on investment will take a long time. Partnership with enterprises can reduce own capital expenditure a great deal and get return on investment in a short time. Therefore, PlayNitride will adopt the latter strategy to expand production capacity and boost the development of micro LED industry.

PlayNitride saw January-July 2022 consolidated revenues soaring 2.6 times on year and expects to reach monthly profitable operation by the end of 2023 due to large capital expenditure reduction.

Q: Is it possible to copy the model of integrating upstream and downstream supply chain makers in China?

A: Production of micro LED panels does not use large-size glass substrates, thus suitable for China as well. But China's display panel industry has heavily invested in OLED, hindering investment in micro LED to some extent. In contrast, Taiwan's panel industry has not invested in OLED and this is the main reason for PlayNitride to license or transfer micro LED technology.

For the time being, micro LED has to compete with OLED in production cost but, for new applications such as AR devices or automotive displays, micro LED is at approximately the same starting point as OLED and other display technologies.

Q: A micro LED supply chain seems to emerge in Taiwan, will there be changes in cooperation among supply chain makers and will cooperation change into competition in the future?

A: There is a proto micro LED supply chain in Taiwan, and materialization of the supply chain is underway.

It is very difficult to precisely predict cooperation models among supply chain makers, and competition and cooperation among makers of any industry always exist. As the supply chain is still developing, all partners have the consensus that micro LED creates new business opportunities that make cooperative efforts worthy. For the time being, the the maturing of the supply chain as an ecosystem is important.

Q: What are PlayNitride's advantages in patent, licensing or transfer of micro LED technology?

A: PlayNitride has independently developed mass transfer technology including design in mass repair, mass inspection and corresponding equipment. Many Taiwanese d makers used to rely on equipment suppliers in developing new technologies, but this was uneasy to set technological barriers because suppliers also sold equipment to other makers.

Based on in-house technology, PlayNitride sought several Taiwanese precision machinery makers to produce equipment subsystems as well as an automated equipment maker to automate the entire equipment. This plays to PlayNitride's advantage. .

PlayNitride is capable of producing 6-inch R/G/B (red-, green, blue-light) micro LED epitaxial wafers of high uniformity in wavelength and brightness. The capability of maintaining the high uniformity and further reducing sizes of micro LED chips is the main consideration for licensing of micro LED technology.

PlayNitride has obtained more than 600 patents in Taiwan, the US, China and South Korea.

Q: Will weak demand arising from inflation cause delay in boosting micro LED?

A: There has been positive initial market response to micro LED, reflecting that top consumer groups are less influenced by inflation. Besides, weak demand creates an excellent opportunity of developing next-generation technologies, for R&D takes some time. So far, there is no delay in micro LED development and clients are more willing to adopt the technology.

Q: How has PlayNitride responded to negative comments?

A: Many senior industry experts commented that micro LED development was unlikely to be successful and, in addition, there were sarcastic comments and cynicism. What they said were right, because if micro LED had been easy to develop, others would have done so earlier. For PlayNitride, if micro LED development ended in failure, it should be psychologically bearable.

PlayNitride scrutinized negative and sarcastic comments to identify rational reasoning toward technological breakthrough, with such comments able to drive technology improvement.

Therefore, PlayNitride regards outside negative comments as nutriments for micro LED technology. For example, skepticism about high production cost has motivated PlayNitride to aim to decrease micro LED production cost by 95% in 2025.

Now, every client take a serious attitude to micro LED development, and PlayNitride's top priority for the time being is to provide sufficient production capacity.