2023 is the year of the explosion of COB technology, which is rapidly replacing SMD technology in small pitch products, especially in the P0.93, P1.25, and P1.56 pitch segments. According to the statistics of Lotu, among the small spacing LED display products (P2.5 and below) in Chinese Mainland, the shipping area of COB products in the third quarter increased nearly 2.5 times year on year, the sales penetration rate reached 14.4%, increased 7.8 pct year on year, and the penetration trend was also significantly accelerated compared with 8.3% and 10.7% of Q1/Q2.

The main viewpoints of China Merchants Securities are as follows:

COB penetration rate is fast.

2023 is the year of the explosion of COB technology, which is rapidly replacing SMD technology in small pitch products, especially in the P0.93, P1.25, and P1.56 pitch segments. According to the statistics of Lotu, among the small spacing LED display products (P2.5 and below) in Chinese Mainland, the COB product shipment area in the third quarter increased nearly 2.5 times year-on-year, the sales penetration rate reached 14.4%, an increase of 7.8 pct year-on-year, and the penetration trend was also significantly accelerated compared with 8.3% and 10.7% of Q1/Q2.

The acceleration of penetration mainly comes from industry cost reduction and price reduction.

Driven by multiple factors such as rapid improvement in packaging yield and pass-through rate, cost reduction of core components such as chips, PCBs, and driver ICs, chip miniaturization, and reduction of core component requirements through industrial design, COB panels will achieve rapid cost reduction and price reduction in 2023. Currently, the price of point-to-point spacing segments such as P1.2 and P1.5 is rapidly approaching SMD, and the price of point-to-point spacing segments at P0.9 is already lower than SMD. Looking ahead, the miniaturization of chips, the introduction of virtual pixel technology, and the replacement of carrier materials are expected to continue optimizing the cost of COB panels.