A new IHS Markit report shows that the global landscape for medical imaging equipment like X-ray and ultrasound will be affected during the next few years by various factors, including aging populations and projected changes in the healthcare spending of important territories.

Worldwide revenue for the medical imaging equipment market is forecast to reach $24.0 billion in 2020, up 11.7% from $21.2 billion in 2016, as shown in the graphic below. X-ray and ultrasound equipment make up the largest segments of the medical imaging equipment space, which also includes magnetic resonance imaging (MRI) and computed tomography (CT) systems.

Forecasts and extended analysis of both overall market and individual imaging segments can be found in the report "Medical Imaging Executive Overview," which collates information from the IHS Markit medical imaging report library to present a summary view of the complete medical imaging market.

Consequences of an aging population

Among the most salient factors expected to impact the medical imaging equipment market is the increasing number of an aging population in all of the world's regions. Those aged over 60 will account for 22% of the global population by 2020, compared to 12% in 2015, according to the World Health Organization. The aging population will lead to a rise in the rate of many chronic diseases, straining healthcare systems in the process and requiring medical imaging equipment to provide high-quality care.

In many countries, however, funds intended for medical imaging equipment are being diverted toward telehealth systems and related services, negatively affecting the imaging market. Also impacting medical imaging budgets is consolidation in the industry, which is taking place in response to continued pressure to eliminate overhead and duplication of services.

A new focus for healthcare providers is procuring new imaging products that bear a higher return-on-investment (ROI), as new technological advances in the field promise simplified workflows in tandem with more advanced software and faster image capture. For example, handheld ultrasound systems could offer better ROI than stationary ultrasound systems, especially as the former confers mobility on providers to conduct patient examinations in multiple hospital locations.

Healthcare spending worldwide is also changing

An important factor that will shape the medical imaging equipment market will be the change in healthcare expenditure patterns sweeping across the world.

In the United States, which accounted for 25% of total market revenue in 2016, continuing intense debate on the country's healthcare system is sure to affect the industry's global prospects down the road. Within the US, imaging equipment will see lower utilization, longer replacement rates, and less equipment being purchased overall.

The depressed outlook on the US market will be alleviated in part by the expected growth in healthcare spending in developing countries, which will lead to increased uptake of basic medical imaging equipment. Last year the Asia-Pacific region represented 40% of global revenue and 43% of global shipments-a strong showing expected to continue in the next few years. In particular, China-the world's second-largest medical imaging equipment market after the US-will continue to drive investments in the space until at least 2020, IHS Markit projections show.

Call to action

For manufacturers to stay competitive, IHS Markit recommends a course of action that includes more so-called work-horse systems in product portfolios, along with establishing an increased presence in growth markets.

With their capability for multi-purpose use in multiple environments, work-horse products and solutions can boost the operational efficiency of medical imaging equipment while also maximizing ROI. Meanwhile, manufacturers can also stand to benefit from a stronger sales presence in promising growth markets such as Asia-Pacific, Latin America and the Middle East.

For more info:

• On this topic, see our Medical Imaging Equipment Executive Overview report and our market insight
• On our coverage of this and related topics, visit our Medical Devices & Equipment research service category

Holley Lewis is an Analyst, Healthcare Technology, at the IHS Technology Group within IHS Markit
Posted 23 October 2017

Mipcom, which ran from 16-19 October in Cannes, France, is the major gathering place for buyers and sellers of TV programming. This year's market and conference highlighted TV drama programming, which is rising high on a wave of investment from online platforms and premium pay-TV channels and others. The growing influence of online platforms was also apparent, with Facebook presenting its video strategy and Snap announcing an agreement with NBC Universal.

On the drama front, there were premiere screenings of new dramas from Telefonica, Sky, and Germany's Beta Film. While Sony Pictures showcased a new 10-part drama called "Counterpart," and all the US studios were present (Disney no longer goes to the other Mip event in April), the US was somewhat overshadowed by its European counterparts.

Mipcom's organisers Reed Midem announced a new event called Canneseries, which will take place in Cannes from 4 April next year and will last a week. With a budget of €4 million, the event will include screenings open to the public, and an official competition presided over by an international jury will present 10 original series. An awards ceremony will close the event on 11 April, to be broadcast live on Canal Plus.

At this year's conference, HBO chief executive Richard Plepler spoke about the US premium channel's decision two years ago to launch its direct-to-consumer service, HBO Now. This year, claimed Plepler, has so far seen the biggest subscriber growth in HBO's history. International rollout is taking shape in three ways: the launch of linear channels, output 'home of HBO' deals in 17 countries, and HBO Now. Plepler announced plans to launch a single global direct-to-consumer platform in the first half of 2018, adding that HBO plans to increase investment in original content outside the US and to offer a selection of these to US viewers on an on-demand basis.

Other signs that the axis of the global TV business has shifted slightly could be picked up in conference sessions. Middle Eastern drama producers spoke about the phenomenal success of "Al Hayba," a drama produced in Lebanon, throughout the Arabic-speaking world. Producers are now setting their sights on wider exports, with many holding up the Netflix series "Narcos"-filmed in Spanish and English-as an example of the way to go. In another session, Turkish drama producer Inter Medya said it plans to make drama shows with fewer and shorter episodes in order to boost sales in parts of the world like Western Europe.

An appearance at the conference by Facebook's video production director and head of creative strategy indicated how the social media platform is planning to develop the role of video. Facebook said that 50% of all mobile data traffic is going to video, an amount that would increase to 75% in the next few years. It was noticeable that all of the video Facebook presented in its session was displayed on a vertical, mobile screen. While Facebook Watch (launched only in the US so far) is only a few weeks old, the video service is to be rolled out internationally, with its first scripted commission-a version of the Norwegian show "Skam"-to be co-produced with Simon Fuller.

The rise of social video was reinforced by Sean Mills, director of content for Snap Inc., who announced a joint venture with NBC Universal for scripted shows. Mills highlighted how video viewing behaviour on the platform is intrinsically different from the TV set as its camera functionality encourages users to create and engage with content rather than the traditional "sit back and consume" approach. As with Facebook, a mobile-centric approach is evident from the focus on portrait videos and split screens. Storytelling on social video is also unique, emphasising the importance of engaging content and pacing in delivery. The director acknowledged that despite growth in mobile viewing, the platform remains a somewhat new medium that is often used in conjunction with the bigger screen rather than working as a substitute.

Netflix, which announced plans to increase its investment in content to $8 billion next year at its latest quarterly results, was also in evidence at Mipcom, announcing its first original children's productions in India and South Korea. Andy Yeatman, kids and family director, said that half of the 104 million homes subscribing to Netflix watch children's content every week. Viewership of children's content outside the US overtook domestic viewing in the last quarter, he added.

As a global platform, Netflix poses a challenge to the traditional, territory-based model of TV programming, which is key to the existence of get-together events like Mipcom. The programming buyer for one European public broadcaster was unhappy that international rights for two new series presented by US studios at this year's LA Screenings had already been sold to Netflix. Rights holders are also exploring cheaper ways of selling programming; Sky and Channel 4 are among the investors in TRX, an online platform for buyers and distributors.

This year a total of 13,900 delegates, including 4,800 programme buyers, attended the event, according to organizers. Both numbers were slightly lower than attendance last year.

Tim Westcott is Research & Analysis Director, Programming, within the IHS Technology Group at IHS Markit

Also contributing to this piece is Fateha Begum, Principal Analyst, Telecom Operator Strategy, likewise with the IHS Technology Group at IHS Markit

Posted 1 November 2017

Surging on a wave of demand, the market for oxide displays used in mobile PCs is headed for spectacular growth this year.

Shipments of oxide TFT-LCD panels sized 9 inches and larger intended for the mobile PC market, which includes the notebook PC and tablet PC segments, are forecast to reach 50.6 million units by the time 2017 finishes. Those numbers represent a resounding 194% growth from shipments of 17.2 million units last year, according to the IHS Markit Large Area Display Market Tracker.

The huge growth is due to a big bump in demand from manufacturers incorporating the displays into more notebooks and tablets, thanks to the various benefits bestowed by oxide technology.

All told, the mobile PC segment will account for 91% share of total shipments in the oxide display space, which also includes the segments for monitors and LCD TVs.

Oxide display technology provides several benefits, including high resolution, lower power consumption than traditional mechanisms like amorphous silicon (a-Si), and lower production costs than in low-temperature polysilicon (LTPS).

Moreover, oxide offers higher electron mobility at 20-30 cm²/Vs, compared to less than 10 cm²/Vs for a-Si. A higher electron mobility paves the way for the use of smaller transistors, in turn enabling reduced power consumption, improved performance in refresh rates, and lower noise in touch-screen sensitivity.

Last, the high resolution of oxide TFT LCD means the displays are well-equipped to handle high-resolution content. Increasingly, such content is being produced in greater quantity given the continuing technological advances in smartphones and TVs, with mobile PCs also gaining in the process.

All these benefits are important to the makers of mobile PCs, eager to seize on any advantage that can be obtained to stimulate a stagnant market.

Advantages and drawbacks of each technology

In comparing LTPS, a-Si, and oxide, one can discern the pros and cons in each technology.

For instance, LTPS can deliver higher-resolution images and consume less power than other solutions. However, its drawbacks include high production costs and low productivity; it is also less efficient in producing large-sized panels. For their part, oxide TFT LCD panels are inferior in resolution and power consumption to LTPS displays, but they are superior to a-Si TFT LCD panels. Oxide is also suitable for large-sized panel production, and the production cost of oxide displays is lower than that of LTPS counterparts.

Because competition is so intense, cost is an important consideration for PC brands. While LTPS is a perfect technology for high resolution, low-power consuming displays, the process is too complicated and the production costs too high.

Important market drivers

Several factors account for the strong demand in oxide mobile panels, including the following:

• Apple and Microsoft both use oxide TFT LCD displays for their tablet devices, and their example has encouraged other brands to do the same. Apple devices include the 9.7-inch iPad with a resolution of 2048 × 1536 pixels per inch (ppi); the 10.5-inch iPad Pro (2224 × 1668 ppi); and the 12.9-inch iPad Pro (2732 × 2048 ppi). Microsoft devices include the 12.3-inch Surface Pro (2736 × 1824 ppi).
  
• Apple has also been using more oxide panels for its MacBook series, following the footprint of the iPad Pro.
  
• Producing an oxide TFT LCD requires a surplus photomask, but not as many as that needed to produce an LTPS display. This helps panel makers enhance their yield rate and production stability when it comes to oxide. To this end, panel makers such as LG Display, Sharp, and CEC Panda have been increasing their shipments of oxide panels.
  
• In the mobile PC segment, a rising trend is the 2-in-1, in which a laptop and a slate-type tablet converge to form a multipurpose device; the form factor is a foldable or switchable keyboard with a PC. Here facilitating dual usage- the notebook laptop for efficiency computing, and the tablet PC for casual computing-requires a high-resolution display with a low frequency in order to be switchable. System stability is, therefore, important. Moreover, the required ppi spec for a 2-in-1 PCs require a resolution range of from 200 to 280 ppi, for which oxide is especially good. Examples are the 10.5-inch with 2224 × 1668 ppi; the 12.3-inch with 2736 × 1824 ppi; and the 12.9-inch with 2732 × 2048 ppi.
  
• For some notebooks and laptops in which a combination of high resolution and lower power consumption is critical, oxide has become the chosen technology. Examples here are the 13.3-inch with 2560 × 1600 ppi; and the 15.4-inch with 2880 × 1800 ppi.
  
• Some panel makers, such as CEC Panda, are also driving the oxide TFT LCD market by shipping more oxide PC panels on their own initiative. Examples here include the 13.3"-inch with 1920 × 1080 ppi; and the 15.6-inch with 1920 × 1080 ppi.

The following panels are currently driving oxide panel shipments:

• 9.7-inch, 2048 × 1536 ppi (iPad Pro)
• 10.5-inch, 2224 × 1668 ppi (iPad Pro)
• 11.6-inch, 1920 × 1080 ppi (Lenovo ThinkPad Helix Ultrabook)
• 12.3-inch, 2736 × 1824 ppi (Microsoft Surface Pro)
• 12.9-inch, 2732 × 2048 ppi (iPad Pro)
• 13.3-inch, 1920 × 1080 ppi (Acer V3 and Dell Chromebook)
• 13.3-inch, 2560 × 1600 ppi (Apple MacBook Pro)
• 15.4-inch, 2880 × 1800 ppi (Apple MacBook Pro)
• 15.6-inch, 1920 × 1080 ppi (Lenovo ThinkPad E570)
• 15.6-inch, 3840 × 2160 ppi (4K2K) (Dell, Asus, Lenovo, Toshiba)

LG Display and Sharp are expanding their oxide mobile PC panel shipments the most aggressively. For its part, CEC Panda will increase shipments from 0.6 million units in 2016 to 4.2 million in 2017.

David Hsieh is Research & Analysis Director, Displays, within the IHS Technology Group at IHS Markit
Posted 6 November 2017

For many people, the term "Internet of Things" (IoT) is, by now, a familiar turn of phrase-a catchy expression that refers to the vast universe of electronic devices and other objects embedded with sensors and software, all connected via networks, enabling the collection, exchange, and analysis of data. A subset of IoT is the Industrial Internet of Things (IIoT), which utilizes the same concepts underpinning IoT but applies on a much bigger scale to industrial entities and processes.

One way to differentiate the two is through their area of focus. Consumer IoT segments are applicable to personal devices, such as smart home systems or wearable electronics. In comparison, the IIoT governs the realm of machines and sensors in industries, often those of critical nature where the failure of systems may result in larger disruptions; or conversely, whose efficient functioning can bestow widespread benefits on both the entity and customers of the particular IIoT process or solution. A breakdown in IIoT utilities, for instance, could presage widespread power blackouts; while a smooth IIoT operation could translate into a lifesaving mechanism, such as when it allows for the seamless monitoring by hospitals of a patient's vital signs during surgery.

To date, an increasing body of evidence supports the many advantages to be gained by firms when they adopt IIoT, leveraging connectivity sensors, software, and analytics. Often a predetermined goal propels a firm's impetus to seek an IIoT solution, and the specific outcome is at the core of a decision-although the innovation that IIoT brings is also central to gaining the internal buy-in of an IIoT solution. One key use case for IIoT is the need-applicable to any industry-to transfer knowledge from an aging workforce to a younger one, with minimal loss of expertise. For instance, the adoption of IIoT can help reduce the skills lost by specialists retiring. IIoT-enabled technologies such as VR can also accelerate the training of less experienced staff.

Another use case is that IIoT adoption can accelerate factory productivity rates, via reduced unplanned downtime on the one hand as well as easier and quicker product customization on the other. A third strong argument is that workplaces incorporating IIoT become much safer, benefiting from 24/7 insight into the well-being and safety of worker environments. In emerging markets, meanwhile, IIoT technologies lower the cost of entry in manufacturing by reducing the need for expensive processes like prototyping, at the same time improving quality and worker productivity standards.

Worldwide, shipments of industrial IoT devices across the categories shown in the charts below are forecast to rise to 252 million devices in 2021, up from 99 million in 2016, IHS Markit data show.

Pilots occur ahead of scale deployments

Manufacturing companies, like those in other sectors, are taking a cautious approach to IIoT adoption. Among the areas of concern are the potential for disruption that results in unexpected downtime, as well as the risk of cyberattacks and loss of data. Companies are, therefore, engaging in trials to help them assess the effectiveness of new technologies and prospects governing return on investment. The deployment of IIoT outside of core production processes, such as for monitoring assets with drones or in logistics, also helps them test the viability and impact of new technologies.

For meaningful change to occur through adoption of IIoT solutions, manufacturers need to implement IIoT in areas of output that directly impact the manufacturing process, such as in motors, machinery, and other capital equipment. By doing so, an IIoT solution can then be unleashed to its full potential-powering the continuous collection and processing of huge reams of data, in order to generate valuable and much-sought-after insights With the growing sophistication of IIoT technology through advances in processing power, software, and platforms, the challenge today is one of broader understanding and acceptance of IIoT within the industrial culture, so that manufacturers can be moved toward greater implementation. For traditional incumbents used to trusting in their systems, a particular fear is placing their valuable cache of data in the cloud, especially at a time when hacking and other cybersecurity threats have become rampant and pervasive.

The four phases of IIoT

There are four phases of the IIoT with innovation occurring at every phase, creating challenges and opportunities alike for manufacturers and suppliers. These four phases, as defined by IHS Markit, are Connect, Collect, Compute, and Create.

• In the Connect phase of evolution, the foundational component for IoT, connectivity and processing capabilities are embedded into devices in IoT solutions. For this phase, continuing advances in 5G and private LTE networks will help address issues related to device connectivity-specifically those pertaining to security, capacity, and network coverage. However, the prevailing lack of common connectivity standards remains a concern. Over the next few years, new technologies-such as time-sensitive networking (TSN), private LTE, and 5G-bring the potential for greater bandwidth and lower latency.
• In the next phase known as Collect, the objective is to gain access to the data of connected devices and move or store this data. With the inclusion of sensor data, the importance of network management and planning is critical for a successful IoT solution. For this phase, standards relating to machine-embedded sensors and I/O link sensor connectivity will improve the data collection and transfer process. At the same time, the role of IIoT gateways-acting as a bridge and the communication protocol translator-between the IIoT device and cloud will expand to support edge analytics/data processing for added intelligence.
• In the third phase of Compute, the collected data is then analyzed and processed for the user to generate intelligent and informed decisions. Here it becomes critical to identify which data should be handled at the so-called "edge" of networks for local processing; and which data should be aggregated and stored in the cloud or if a hybrid solution is most appropriate. For this phase, security concerns will restrict the adoption of cloud-based services for storage, processing, and analyzing of large data volumes. Edge computing then emerges as a viable alternative to locally processed data, sharing only necessary information with the cloud.
• In Create, the final phase, unique solutions provide value to stakeholders through access to transformational data, ultimately achieving very specific, predetermined outcomes, including decreased downtime or outages in operations, reduction in waste, higher cost savings, or new business models. In this phase, existing capabilities such as 3D printing will become more sophisticated, and artificial intelligence will be used more intensively.

Where IIoT stands with various industries

The adoption of IIoT varies across the industrial landscape, depending on the openness of each vertical in embracing IIoT technologies, as well as on individual industry knowledge, conservatism, access to capital, and integration challenges. Analysis is necessarily complex in the case of IIoT, especially because industrial coverage is broad and intersects with multiple vertical markets, resulting in an incredibly diverse set of end customers compared to, say, verticals in the IoT universe.

In the five sample verticals below, IHS Markit tracks the position of each vertical relative to its IIoT evolution phase.

• The Manufacturing space, for instance, is now at the stage where the industry is using advanced sensors to expand asset monitoring, with edge computing supporting additional data processing capabilities undertaken separately in the cloud.
• In Energy, the oil and gas industry is seeking to apply advanced analytics on available data to automate upstream processes while also bringing about operational efficiency through increased drilling accuracy, resource savings, and improved equipment maintenance.
• In Maritime, the industry is moving toward satellite services to capture many potential applications, such as asset tracking, route optimization, and equipment monitoring.
• In Agriculture, IIoT is being expanded in smaller agricultural units for them to partake in potentially bigger opportunities in the future, even as larger farms move a step further toward drones and robotic technology for large-scale field support.
• In Chemicals, industrial applications for IIoT remain limited at present, due to the high risks involved in critical assets within the process. The Chemicals industry must also see how they can maximize revenues through IIoT, as revenue opportunities are presented through the billions of plastic IIoT devices projected to be shipped across all industries and providing demand to the specialty plastics sector.

Overall, the ramifications of IIoT adoption are much greater than comparable considerations for consumer-centric IoT applications. This is because the factors of production involved in IIoT are so much larger and cover critical spheres of human activity, where the failure of systems is not an option.

Moreover, each vertical has some form or component of manufacturing that is involved in the production of its goods, which means there is a direct relationship and impact that can be measured by a manufacturing entity's adoption of-or failure to adopt-IIoT, for better or worse. For most manufacturers, the roadmap to IIoT adoption will be one dictated by their own needs and customers.

Jenalea Howell is Research Director, Internet of Things, within the IHS Technology Group at IHS Markit

Also contributing to this piece are Sheryna Gurmeet Singh, Research Analyst; and Alex West, Principal Analyst, Smart Manufacturing-both likewise with the IHS Technology Group at IHS Markit

Posted 10 November 2017

Medical lasers allow high levels of precision to physicians, while inflicting less damage on the surrounding tissue of those being treated than through other treatment techniques. The benefits to patients may include less pain, less scarring, and faster recovery time.

In general, lasers facilitate less invasive surgical procedures. For the aesthetic market in particular, the decline over the years in the cost per procedure associated with lasers, coupled with the increasing general acceptance of cosmetic surgery, has served to attract a broader base of patients.

Many applications for medical lasers also stem from procedures that treat conditions related to age. With the volume of these procedures expected to keep increasing, and with people all over the world for the most part experiencing growing longevity, opportunity is strong for medical lasers to enjoy continued growth as a replacement to traditional modalities across all applications.

However, the medical laser industry is subject to intense competition. For instance, forming part of the research for the IHS Markit report on medical lasers was a group of more than 50 vendors-manufacturers that compete with laser and other energy-based products offered by public companies, with several smaller specialized private companies, and in the future with new companies likely to enter the market. The same group of vendors must also compete with non-laser and non-light-based medical products, including traditional cutting tools and drills; other advanced technologies, such as ultrasound and radiofrequency (RF); and electrosurgical devices. Furthermore, pharmaceuticals are often utilized and so also serve as another form of competition.

Aside from competition, another weakness of the medical laser industry stems from the relatively high cost of equipment, along with the resistance proffered by some physicians who do not believe lasers to be a beneficial alternative when compared to traditional treatment methods.

Overall, the world market for medical laser systems, consumables, and maintenance posted total revenue of $2.9 billion in 2016. Medical laser systems represented the largest sector, with sales of $2.0 billion. By 2022, revenue is forecast to hit $3.7 billion, equivalent to a compound annual growth rate of 10.4% for the six-year period.

The key drivers for the medical laser market include:

• An increasingly aging population. Many medical laser applications are for procedures (e.g., ophthalmology, dermatology, and aesthetic) to treat age-related conditions. The number of these procedures will increase in tandem with the rise in aging populations worldwide.
• In the aesthetics market, lower costs and more social acceptance of cosmetic surgery have served to attract a broader base of patients.
• Medical lasers are likely to see continued growth as replacement to traditional modalities across all applications covered in our IHS Markit report.

The most common medical laser types in 2016 were CO2, Nd:YAG, and diode:

• Ophthalmology makes use of a wide range of laser types, including solid-state (Nd:YAG and KTP), excimer, gas (CO2 and argon); and to a lesser extent, diode and fiber, which have been noted for retinal photocoagulation. Ultrafast and ultrashort pulse lasers known as femtosecond lasers are used in ophthalmology, and may have a medium of diode, dye, solid-state, or fiber.
• Dermatology makes use of a wide range of laser types that includes CO2, solid-state (Nd:YAG, Er:YAG, and ruby), diode, dye, and fiber. The most commonly referenced types are CO2 and Nd:YAG.

The United States and Western Europe combined represented the majority of global 2016 medical laser revenue, accounting for 59.4% of the total market. Robust expansion is forecast for both regions through 2022. In comparison, the Eastern European market is one region experiencing constraints because of lingering poor economic conditions, even though the area is expected to see strong growth during the forecast period.

In the Asia Pacific region, Japan has been driving growth. However, China's expanding middle class is expected to lead in investments in personal care, which will account for the increased use of medical lasers.

Shane Walker is Research & Analysis Director, Healthcare Technology, within the IHS Technology Group at IHS Markit
Posted 17 November 2017

The latest Display Supply Demand & Equipment Tracker from IHS Markit shows that global AMOLED capacity will rise from 11.9 million square meters (sq m) in 2017 to 50.1 million sq m in 2022, equivalent to 322% growth. The numbers include capacity for RGB OLED-utilized mainly for smartphones, mobile devices, virtual reality, and automotive; as well as capacity for WOLED, also known as White OLED--used primarily for TVs. Of the two segments, RGB OLED has the larger share of market, with capacity growing from 8.9 million sq m in 2017 to 31.9 million sq m in 2022.

Among players, Samsung Display reigns supreme with 87% of global RGB OLED capacity, followed by fellow South Korean rival LG Display, and Tianma and Visionox from China. The Chinese are aggressive in expanding RGB OLED capacity, especially on flexible display technology, and China's share of market is projected to soar rapidly in the next couple of years.

Developments on the Chinese front include the following:

• BOE is ramping up B7, its first Gen 6 flexible RGB OLED fab, in late 2017, and is now constructing the new B11 fab; its B12 fab is also being planned. All three are Gen 6 flexible-technology RGB OLED fabs with a capacity ranging from 30,000 to 45,000 substrate sheets per month. Furthermore, After B12, BOE is considering whether to build another two Gen 6 flexible OLED fabs, but the support of local governments will be needed.
• ChinaStar is currently running a Gen 6 LTPS/TFT LCD fab, while its next fab-the T4, a Gen 6 RGB OLED facility with low-temperature polysilicon (LTPS) backplane capability-is under construction. ChinaStar is also deliberating whether to build another Gen 6 OLED fab after T4.
• Tianma has an LTPS + OLED fab in Wuhan, in central China, targeting flexible substrates. The fab is now under construction and will be ready for mass production in 2018.
• EverDisplay is constructing a new Gen 6 Flexible OLED fab in Shanghai, in addition to its current Gen 4.5 rigid OLED fab also in the same city.
• Visionox at present operates a Gen 5.5 LTPS+OLED fab for rigid glass substrates. And with an infusion of capital from China's Black Cow group along with financial support from the local government, Visionox is building a Gen 6 flexible OLED in Gu'an County north of Beijing. The company is also considering another new Gen 6 flexible OLED fab outside Gu'an.

For their target, all the new RGB OLED fabs under construction in China aim to produce flexible substrates at full screen size, utilizing the 18.x:9, 19.5:9 super-wide aspect ratio as well as a curved-edge smartphone display form factor for the next couple of years. In the long term, the fabs will undertake production of bendable and foldable screens for mobile devices.

The charts below show Chinese fabs in development for Gen 5.5 and above as well as for Gen 8.

By 2022, Chinese makers will possess RGB OLED capacity of some 10.7 million square meters, equivalent to 34% share of the global total, Chinese capacity will mostly target the smartphone display market, reserving some volume for virtual reality and augmented reality applications as well as for the automotive space.

Some concerns remain

Despite the aggressive expansion of Chinese RGB OLED makers, concerns remain, especially because flexible OLED technology requires a long learning curve that impacts production variables such as yield rate, stability, and reliability. Another important issue is customer cooperation: Because of the long learning curve, smartphone makers and other similar customers will need patience to work with the just-emergent technology on issues like display panel design and mass production.

Chinese OLED makers also may face fierce onslaught from Samsung Display, a player of indisputable power and might with the commensurate capacity, technological acumen, and strength to block Chinese manufacturers in their attempt to grow.

Indeed, Samsung Display remains the dominant force in RGB OLED for smartphone displays. Its RGB OLED capacity will increase from 7.7 million sq m in 2017 to 16.6 million sq m in 2022, with capacity built on giant fabs like the A4 and A5 in South Korea.

Centralizing giant fabs in one site can be advantageous, offering the best economies of scale, optimum efficiency, and a streamlined supply chain. Massive OLED fabs can also serve as a bulwark of stable and sufficient supply for large purchase orders from key customers; in Samsung Display's case, these would be its internal customer of the same name, for the Samsung Galaxy line of smartphones; and from Apple, for its industry-leading iPhone. Last, giant fabs are well-placed to enjoy cost savings in operations given that these fabs often already boast smooth throughput-an advantage they can wield over their competitors.

The centralized, giant-fab approach of the Koreans contrasts with the smaller, distributed tactics employed by China's OLED makers. Because a giant fab at this point would provide little practical benefit, the Chinese are opting instead to build several dispersed and separate OLED fabs. Moreover, domestic players hoping to build infrastructure such as that required for RGB OLED will need the support of subsidies from local governments. As a result, it makes sense for the Chinese manufacturers to build around the country as they chase the available money from government coffers.

This type of investment, however, is not suitable for very-large-scale WOLED initiatives-simply because the risks for failure are too high. This is also one reason why there are numerous state-of-the-art Gen 10.5 fabs in China for TFT LCD, where both the technology and market are comparatively mature, but which isn't the case with Gen 8.5 WOLED.

The much smaller capacity of the Chinese, compared to that of Samsung Display, may also shape competition in the future. Samsung Display will use its colossal capacity to meet the needs of the South Korean maker's two critical customers-Samsung and Apple. Chinese makers, meanwhile, will be targeting the relatively smaller projects of smartphone makers in China, such as Huawei, Xiaomi, Vivo, Oppo, Meizu, Lenovo, and ZTE, along with many white-box makers.

With the smartphone war now expanding from brand allure to also include essential components and features such as the phone's display, the challenge facing China's makers will be most acute during a stagnant or oversupply market situation. Because Apple and Samsung on their own won't be able to digest all the excess RGB OLED panel output produced by Samsung Display in the event of market stasis, the South Korean titan will bring to bear all of its considerable heft and might to go after the local Chinese smartphone makers that currently make up the customer base of domestic OLED makers.

That is certain to put Chinese players in a bind, as they will inevitably have to compete with a powerful foreign-based player on the home front, on ground zero where they are supposedly most secure.

By 2022 and assuming that expansion is carried out by each key player accordingly, RGB OLED capacity for each player will stand at the levels shown below, based on IHS Markit forecasts in the Display Supply Demand & Equipment Tracker. The list includes only those companies deemed to have a greater than 30% possibility of investing in forthcoming RGB OLED capacity.

• Samsung Display: 16.6 million sq m; 52% capacity share of world total
• BOE: 4.8 million sq m; 15% capacity share
• LG Display: 3.4 million sq m; 11% capacity share
• Tianma: 1.9 million sq m; 6% capacity share
• ChinaStar: 1.5 million sq m; 5% capacity share
• Visionox: 1.4 million sq m; 4% capacity share
• EverDisplay: 1.2 million sq m; 4% capacity share

David Hsieh is Research & Analysis Director within the IHS Technology Group at IHS Markit
Posted 27 November 2017

Note: For a complete analysis of the transformative technologies of 2018, download the white paper.

IHS Markit has identified eight transformative technologies to watch in 2018. Some are new, and some are rapidly evolving-and even teaming up-in ways that are disrupting industries and fueling innovation at lightning speed. Take a look at what we think you need to pay attention to:

1. Artificial Intelligence (AI)

Industry experts are abuzz with innovations in autonomous vehicles, infotainment, natural language processing, and augmented reality. Stay sharp by listening to concerns about data security and the debate over cloud-based vs. device-based implementations.

2. Internet of Things (IoT)

The IoT is converging with other transformative technologies in 2018 to create new growth opportunities. Pay particular attention to analytics-driven IoT platforms, computing at the edge, and data exchange brokerages (DEBs), as IoT influences everything from home security systems, to oil and gas exploration, to smart cities, to retail experiences, and beyond.

3. Cloud and virtualization

Cloud services will pave the way for technologically immature companies to utilize machine learning (ML) and AI, radically transforming their usage and understanding of data.

4. Connectivity

While it's important to keep track of 5G's rapid and meaningful development, it is crucial to pay attention to other network players as well, such as LPWA, private LTE, D2D/mesh, mobile broadband, fiber, and LEO satellite.

5. Ubiquitous video

Expanded video capabilities will have impact far beyond the video supply chain itself. Look for bigger and better screens, plus continued consumption of video, to alter strategies in multiple markets not directly tied to the video supply chain.

6. Computer vision

Using technology to read images and analyze data as well as-and as quickly as-the human eye will quite literally transform our world. From facial recognition software to self-driving cars, advanced robotics, and surveillance, this technology will accelerate innovation across multiple industries.

7. Robots and drones

Talk about robots and drones is nothing new. But 2018 could show us the deeper story: the disruptive potential of of robots and drones to transform long-standing business models in manufacturing and industry. From logistics, to material picking and handling, to navigational autonomy and delivery, robots and drones are poised for a big breakout.

8. Blockchain

Blockchain-based services beyond financial services are already being deployed and will continue to grow in 2018. Yet the commercial potential is still unclear, and many challenges remain. Mainstream adoption is dependent upon continued experimentation and business model evolution.

Download the full PDF of this blog posting.

IHS Technology Group at IHS Markit
Posted 5 January 2018

Direct-lit LED backlight technology reigns supreme
Edge-lit is sidelined, while micro-LEDs could mount new challenge

The technology known as direct LED backlighting has gone mainstream, as discussed in the latest IHS Markit Display Backlight Market Tracker.

Global shipments of TVs featuring direct LED backlighting—also known as direct-lit LED—accounted for a whopping 77% share in Q2 2017, where it stayed for the rest of the year, up from 69% the same time in 2016. Direct LED has been used since 2014 in various ultra-high-definition TV models for both the entry and mainstream TV segments, which has led to a progressive decrease in shipments of TV panels using the rival edge LED backlighting technology, as shown in the chart below.

Direct LED vs. edge LED

The difference between direct LED and edge LED lies in the placement of the LED backlight units, determining each technology’s benefits as well as drawbacks. In direct LED technology, the LED light sources are installed at the back of the LED panel. In contrast, the backlights in edge LED are located on the edges of the display panel, usually on opposing sides of the display, facing in toward the TV.

Direct LED backlighting can help lower panel-manufacturing cost. Fewer LEDs are required compared to edge LED, and light-guide plates are not needed given that the LED arrays are situated directly on the back of the backlight rather than at the sides.

However, direct LED backlighting is comparatively thicker than edge LED—the latter is best for a slim design—because the LED array of direct backlights must be kept at a specific distance from the diffuser plate in the backlight module. Even so, it is this gap, also known as optical distance (OD), that enables the uniform and bright illumination of the TV backlight prized in direct LED.

The biggest benefit from direct LED backlighting is local or 2D dimming, a feature that dims the backlight behind areas of the screen that display black. Necessary for LCD TVs featuring High Dynamic Range (HDR), 2D dimming allows for greater contrast, so that blacks appear darker and deeper when film or video is viewed; HDR is not possible with edge LED.

Some panel and TV set makers have also been working to reduce the thickness of direct LED backlights. Already, the OD of direct LED backlights has decreased to 15-18mm today, compared to 25-50mm in the past, allowing for much slimmer TV profiles. The newest development is D-LED 3.0, in which direct LED backlight modules are 10mm thick with an OD of 15mm, yielding a total backlight module thickness of just 25mm, with very narrow edges.

The key to reducing backlight thickness is by resolving uniformity issues, like what is being carried out by Samsung Electronics, which uses a specially designed second lens along with an increase in the number of LEDs to help achieve uniform illumination.

Micro-LED backlighting: advantages and challenges

For 8K displays and large sizes, however, some panel makers are considering a different direction altogether. As discussed in the Market Insight “Micro-LED display opportunities in the competitive display industry,” panels featuring micro-LED backlighting technology cannot compete at present with LCD or OLED in mainstream applications like TVs, tablet PCs, notebook PCs, desktop monitors, and smartphones, with LCD and OLED expected to continue dominating in these areas. Instead, the most promising initial applications for micro-LED display technology are likely to be smartwatches, public information, and automotive.

But rather than developing micro-LEDs for displays, panel makers are developing micro-LED backlights to offer the benefits of both thickness and HDR for high-end televisions, including 8K TVs in the 65-inch, 75-inch, and 80-inch-and-above sizes. Panel makers believe that micro-LED backlight technology can achieve high-performance HDR and an ultra-slim structure at the same time—two features not possible before in tandem.

The biggest advantage of micro-LED backlighting is a thinner form factor, with displays as slim as 10mm, allowing micro-LEDs to compete with high-end direct LED backlights and OLED TVs. Micro-LED chips measure a mere 0.1mm in thickness, and a second lens for boosting luminance efficiency is not needed. In comparison, the height of an LED chip together with the lens package in traditional direct LED backlighting measures 6-8mm. This means the OD is greater, as shown below. With a micro-LED chip and a smaller OD, the entire backlight module can be as thin as 10mm, compared to 24-25mm for direct LED.

A second advantage is that micro-LED backlights can achieve better HDR with more zones for local dimming, as more LED chips are utilized than in direct LEDs. And because micro-LED backlights use smaller LED chips, more uniform light distribution can be achieved.

Micro-LEDs can also reduce panel-manufacturing cost, since both the traditional wire bonding and frame of LED arrays are not needed. Moreover, micro-LEDs can utilize flip-chip-on-modules (FCOMs), providing additional cost savings given that the flip-chip requires neither a second lens nor a package. It must be noted, however, that FCOM requires revising the current backlight design, which would result in additional overhead that could prove onerous to smaller players and makers of small backlight module systems.

There may also be additional issues in using micro-LED backlights, including the following:

• Micro-LED technology requires the use of more LED chips, translating into higher power consumption. While a 75-inch 8K television may need 1,000 direct LED chips as the light source, at least 70,000 chips would be needed in micro-LED, with power consumption 1.5 times greater than that used by direct LED backlighting.
• Given the high number of micro-LED chips that must be installed on the backside of panels, heat dissipation will be critical.
• Although not a major issue when it comes to color binning—as micro-LEDs for backlighting are white in color and therefore have no color function—luminance uniformity could still be affected. Color binning is the process in which LEDs are tested and sorted.
• The key technology for producing micro-LEDs is the transfer method, in which equipment constraints and an immature process are known limitations. Production time for micro-LED could be 10 times longer than that for a direct LED, raising costs as a result. And because the technology is comparatively new, overall reliability remains to be proven.

David Hsieh is Research & Analysis Director within the IHS Technology Group at IHS Markit
Posted 17 January 2018

Note: For a complete analysis of the transformative technologies of 2018, download the white paper.

IHS Markit has identified eight transformative technologies to watch in 2018. Some are new, and some are rapidly evolving-and even teaming up-in ways that are disrupting industries and fueling innovation at lightning speed. Take a look at what we think you need to pay attention to:

1. Artificial Intelligence (AI)

Industry experts are abuzz with innovations in autonomous vehicles, infotainment, natural language processing, and augmented reality. Stay sharp by listening to concerns about data security and the debate over cloud-based vs. device-based implementations.

2. Internet of Things (IoT)

The IoT is converging with other transformative technologies in 2018 to create new growth opportunities. Pay particular attention to analytics-driven IoT platforms, computing at the edge, and data exchange brokerages (DEBs), as IoT influences everything from home security systems, to oil and gas exploration, to smart cities, to retail experiences, and beyond.

3. Cloud and virtualization

Cloud services will pave the way for technologically immature companies to utilize machine learning (ML) and AI, radically transforming their usage and understanding of data.

4. Connectivity

While it's important to keep track of 5G's rapid and meaningful development, it is crucial to pay attention to other network players as well, such as LPWA, private LTE, D2D/mesh, mobile broadband, fiber, and LEO satellite.

5. Ubiquitous video

Expanded video capabilities will have impact far beyond the video supply chain itself. Look for bigger and better screens, plus continued consumption of video, to alter strategies in multiple markets not directly tied to the video supply chain.

6. Computer vision

Using technology to read images and analyze data as well as-and as quickly as-the human eye will quite literally transform our world. From facial recognition software to self-driving cars, advanced robotics, and surveillance, this technology will accelerate innovation across multiple industries.

7. Robots and drones

Talk about robots and drones is nothing new. But 2018 could show us the deeper story: the disruptive potential of of robots and drones to transform long-standing business models in manufacturing and industry. From logistics, to material picking and handling, to navigational autonomy and delivery, robots and drones are poised for a big breakout.

8. Blockchain

Blockchain-based services beyond financial services are already being deployed and will continue to grow in 2018. Yet the commercial potential is still unclear, and many challenges remain. Mainstream adoption is dependent upon continued experimentation and business model evolution.

Download the full PDF of this blog posting.

IHS Technology Group at IHS Markit
Posted 5 January 2018

(Available to our subscribers)

WCG market poised for growth on recovery in QD demand – Richard Son
The adoption of wide color gamut (WCG) solutions, along with 8K4K and high dynamic range (HDR), is increasing in the display market for product differentiation.

China PV installations to boom in Q4 after grace period removal
China’s anticipated FiT reduction of 0.10 yuan/kWh in each resource area, and 0.05 yuan/kWh for DPV, will—in line with the previous forecast—drive an installation rush of applicable projects in the first half of 2018.

Smart Grid Software and DERMS Steal the Show: Highlights from Distributech 2018 – David Green, Camran Barati, Thomas Frashier
Distributech 2018 was held this year in San Antonio, Texas from January 23rd -25th, where IHS Markit analysts Camron Barati, David Green, and Thomas Frashier were on site across the three days to meet with thought leaders and cover the latest technology trends in utilities.

U-blox to provide modules for Iomote cellular IoT gateway – Julian Watson
Earlier this month u-blox announced that its SARA series of cellular modules had been chosen to provide wireless connectivity to Iomote’s customisable X400 gateway, which is targeted at Industry 4.0 use cases.

Competitive environment shakeup - What's ahead for ultrasound companies in 2018? – Holley Lewis
IHS Markit discusses the biggest mergers, acquisitions, and initial public offerings of the year and analyzes the implications for the global ultrasound market.

Safeguarding tariffs on washing machines could trigger turbulence in global trade policies – Dinesh Kithany
Imposing higher tariffs on washing machines may not necessarily achieve the Trump Administration’s desired objectives. However, it could be a precursor for other protectionist trade policies, expected in 2018 and beyond.

Large-area panel shipments decreased 4% M/M in December – Robin Wu
Combined shipments of large-area and small/medium TFT LCD panels increased 2% M/M to 264 million in December, but were down 3% Y/Y.

Cable in Europe: Innovation-driven growth in a hyper-competitive market – Maria Rua Aguete
Maria delivered a presentation entitled: Cable in Europe: Innovation-driven growth in a hyper-competitive market. At the ITU (International Telecommunications Union) HQ in Geneva.

UPS installed base highlights effects of data center consolidation – Lucas Beran
The data center industry is thriving—so it would seem.

World Future Energy Summit 2018: tenders, technology and local content – Josefin Berg
IHS Markit attended the World Future Energy Summit in Abu Dhabi on 15 to 18 January 2018. Here are four takeaways from the trade show.

Smart speakers with a new feature: Built-in touch display – Calvin Hsieh
The smart speaker is an emerging application ever since Amazon released Echo series products in November 2014. Google announced Google Home in November 2016.

201 resolution generates confusion and uncertainty for cell and module manufacturers – Edurne Zoco
The 201 trade case has finally reached a conclusion but a number of questions remain, generating confusion and uncertainty across the supply chain.

PV inverter suppliers develop digital energy solutions – Cormac Gilligan, Miguel de Jesus
SMA announced last week that it would set up a digital energy solution subsidiary named Coneva, a move that is a natural stepping stone to diversifying its business and expanding its customer base.

Sensors and Medical Devices: IoT and the Rise of Remote Patient Monitoring – Brian O’Rourke
The role medical devices within medicine is changing rapidly. As service providers seek to control costs, both medical devices and the sensors within them will play an increasingly important role, pointing the market towards different methods of patient care, greater flexibility and lower costs.

Displays at CES 2018 - Special Report – Nick Jiang, David Hsieh
This special report examines the display-related trends and announcements at CES that are important to IHS Markit customers.

IHS Markit has updated Amazon Prime Video forecasts
IHS Markit has updated the valuation of bundled Amazon Prime Video subscriptions in 15 of the 16 countries it now operates.

Indian TV advertising and online video revenues growing fast, fueled by demand for unique content – Jun Wen Woo, Kia Ling Teoh
What follows is information and insight from IHS Markit about the Indian TV and online video market.

Operator Survey: Smart central offices to be in 85 percent of service provider networks this year – Michael Howard, Heidi Adams
What follows is information and insight from IHS Markit about our latest Routing, NFV and Packet-Optical Strategies Survey.

NFC integrated into display assembly – Calvin Hsieh
The success of embedded touch on smartphones has increased panel maker confidence about sensor integration.

Declining PPA prices in Latin America and key ingredients for successful project completion in the region – Josefin Berg, Maria Chea
In Q4 2017, a string of PV markets in Latin America announced the results of government mandated electricity auctions. Argentina, Brazil, Chile, and Mexico awarded more than 4 GW of combined PV project capacity, with bid prices reaching new lows in each country.

Digital screens edge up in 2017 led by China and other high screen growth territories – Charlotte Jones
IHS Markit has added data for digital and 3D screen totals at Q4 2017 for all territories and regions tracked by Cinema Intelligence. The data is also available for equipment manufacturers and as market share comparisons.

Internet of Things and the pump market: How the industry will evolve – Joanne Goh
The global pump market has been extremely volatile during the past two years with the decline of global oil and commodity prices. Pump manufacturers are looking for ways to minimize profit losses amid these trying economic uncertainties.

United States solar import tariff reaches a conclusion, but a number of questions remain – Camron Barati, Sam Wilkinson, Edurne Zoco
A period of huge uncertainty in the United States PV market was ended late on Monday 22nd January 2018, when the Trump administration made a final decision on implementing import tariffs on PV cells and modules.

Xbox Game Pass day and date experiment a precursor to bigger things – Piers Harding-Rolls
Microsoft has announced it will be adding all new Microsoft Studios releases for the Xbox One to its Xbox Game Pass subscription service at the same time as their retail release.

24-hour notebook likely to be released in 2020-2021 – Peter Su
PC brands are pushing notebook battery time to 24 hours. Qualcomm claims that its Snapdragon 835 CPU can reduce power consumption by 50% while offering a performance similar to the Intel i3 CPU.

Access management global revenue to reach nearly $10 billion by 2021 – Don Tait
Following is information and insight from IHS Markit on the latest trends and outlook for the world access management market.

Declining PPA prices under the shadow of the Section 201 Trade Case in the United States – Maria Chea, Camron Barati
In the second half of 2017, a number of utility-scale PV solar projects were awarded contracts with record low PPA prices for the US market.

Service providers diverge on optical disaggregation – Heidi Adams
Following is information and insight from IHS Markit about our latest Optical Network Strategies Service Provider Survey.

BOE establishes nine business units for special, industrial, and other display applications – David Hsieh
Targeting non-TV and non-IT markets, BOE set up nine business units, including video wall, ESL, IWB, digital signage, wearables, automotive, industrial, medical, and smart home.

Factors influencing TV panel prices in H1 2018 – David Hsieh
There are many signs the market is improving and low panel prices will stabilize and increase.

Will clouds of consolidation rain on the semiconductor industry’s parade of innovation? – Brad Shaffer, Wayne Lam
This past November Broadcom Limited submitted an unsolicited bid for rival semiconductor supplier Qualcomm in what would be the largest acquisition in semiconductor industry history.

China sets its sights on the optical components market – Heidi Adams
In January 2018, China’s Ministry of Industry and Information Technology (MIIT) released its Optoelectronic Devices Industry Technology Roadmap, a five-year plan to improve China’s capabilities in the optoelectronics industry.

Digital licensed mobile radio users exceeded the number of analog users for the first time in 2017 – Ryan Darrand
Following is information and insight from IHS Markit about our Licensed Mobile Radio Terminals Report.

Led by emerging technology, in-cell touch solutions topped on-cell in mobile phone touch panel market in 2017 – Calvin Hsieh
Following is information and insight from IHS Markit about the smartphone touch panel display market.

The lighting up and product delivery ceremony at BOE’s Hefei Gen 10.5 LCD fab – Chase Li
On 20 December 2017, BOE held a grand ceremony at its B9 fab in Hefei, the world’s first Gen 10.5 display fab and announced the start of mass production.

Airtel Africa makes its fifth market consolidation move by acquiring Tigo Rwanda – Julie Ssali
Airtel Africa confirmed that they have entered an agreement with Millicom to acquire Tigo Rwanda, marking their fifth market consolidation move in Africa since 2013.

Analytics and ecosystems inspire smarter homes at CES 2018 – Blake Kozak
The smart home is evolving into smart life, with automotive manufacturers making big moves to blend the car and home experience, outdoor lighting for security and entertainment purposes, and community video sharing.

CES 2018 – More than 700 exhibitors focused on digital health, a $21 billion market in 2021 – Shane Walker
Digital health was a continuing trend at CES 2018 with 26% of exhibitors having an offering within biometrics, health and biotech, sports and fitness, or wearables.

Smartphone face ID means more than 1 billion fewer fingerprint sensors will be shipped from 2017 to 2021 – Jamie Fox
Following is information and insight from IHS Markit about our latest Fingerprint Sensors Overview Report.

2018: DAS and small cells face off for neutral host applications – Stephane Teral, Richard Webb
Adding small cells or low power nodes (e.g., microcells, picocells, and micro/pico RRH/RRU) to beef up the coverage and capacity of existing macrocell networks shows no sign of abating any time soon.

Amazon nipping at Netflix’s heels – Max Signorelli
Following is information and insight from IHS Markit about our new report, Amazon’s Video Ecosystem Extends Worldwide.

Despite uncertainty generated by domestic policy reform, the United States will remain a top 3 global market for PV – Camron Barati
The US solar PV market will experience another year of decline in 2018 before resuming growth in 2019.

CES 2018 - TV Headlines and Insights – Paul Gagnon, Paul Gray, Ken Park, Bing Zhang
Headlines from CES 2018 for TVs.

The 2018 telecom capex forecast is looking up – Stephane Teral
Our model points to 1.2% YoY growth fueled by the United States.

Tele2 and Com Hem to create combined fixed and mobile operator in Sweden – James Joiner, Martyn Hannant
Tele2 and Com Hem are to combine their businesses in Sweden, creating an integrated fixed and mobile operator.

Chinese TV makers try to regain bargaining power to achieve business plans – Nick Jiang
China’s top six TV makers resume panel demand in Q4.

Large-area LCD panel shipment forecast and business target overview – Linda Lin
For Q1 2018, the panel shipment forecast for each application is down 5 9% Q/Q.

2018: Fixed 5G starts, mobile infrastructure market crumbles again – Stephane Teral
We’ll have to wait until late 2019 for “mobile” 5G and 2020 for market growth.

4DX hits new BO record on back of highest rate of new screens – Charlotte Jones
Experiential 4D cinema company CJ 4Dplex has set new records for gross box office and admissions in 2017 driven by a high for new screens amid the strengthening of longer term partnerships with key exhibitors.

Pickle TV, Orange France starting short form video service – Mathieu Yulzari
Orange France has launched a new video offer for its TV and mobile customers (Orange and Sosh).

AWS re:Invent 2017: Amazon’s Alexa becomes business savvy – Devan Adams
Amazon Web Services’ (AWS) re:Invent 2017 conference was held in Las Vegas, NV, from November 27 to December 1.

China's machinery production projected to grow steadily over the next four years – Lisa Wang, Teik Chuan Goh
From a low base in 2016, total revenue from Chinese machinery production is estimated to have increased 4.9% in 2017, and will continue to grow at a CAGR of 6.9% from 2018 to 2021.

Moore’s law still alive in the data center, but is it enough? – Clifford Grossner, Vladimir Galabov
When Gordon Moore made the observation that the number of transistors in an integrated circuit doubles every two years, known as Moore’s law, he also predicted technological limitations would eventually lead to the end of this era, with successive generations either seeing less than 2x growth in transistor count or taking longer than two years.

Global food and beverage processing machinery market to sustain solid growth, rounded $60.9 billion in 2021 – Sudhakar Chaudhary
Following is information and insight from IHS Markit about our Food and beverage automation opportunities research.

System-level RF solution at the forefront of Qualcomm’s increased RF front-end traction – Brad Shaffer
System-level RF solution is at the forefront of Qualcomm’s increased RF front-end traction.

A Year of Transformation: What to expect from CES 2018 – Dinesh Kithany
As we set into the New Year, and on the onset of CES 2018 where companies showcase their capabilities and plans for coming year, it’s time to set our eyes on the things we might or even want to expect in the year 2018.

Cinema box office in China back to growth in 2017 – Xin Jhang
As the second largest cinema market (by box office, and the largest by number of screens) in the world, China had a good year 2017 with box office reaching RMB 55.9 billion ($8.4 billion), a 22.3% year-on-year growth, according to data from the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT).

DisplayPort expected to surpass HDMI in 2019 – Norman Akhtar, Dinesh Kithany
The number of devices adopting DisplayPort is expected to surpass devices with high-definition multimedia interface (HDMI) in 2019 by more than 23 million devices.

Global heat meter market will top $700 million in 2020 – Claudia Portugal
Heat meter shipments grew by over 150 thousand units in 2017, as the market showed strong growth over 2016.

In 2018, Analytics and AI in Healthcare Look to Take Center Stage – Nile Kazimer, Jason dePreaux
The 103rd Scientific Assembly and Annual Meeting of the Radiological Society of North America (RSNA) brought together over 50,000 attendees at Chicago’s McCormick Place from November 26th to December 1st, 2017.

Laser cutting glass for full screen displays – Kimi Lin
The full screen display trend is coming, and laser cutting is efficient and produces high quality.

Reliance Communications sells mobile assets to Reliance Jio – Przemek Bozak, Seth Wallis-Jones
Reliance Communications (RCOM) has effectively finalised an exit from the mobile communications market with the sale of assets including spectrum, 43,000 towers, 178,000 route kilometres of fibre, and 248 Media Convergence Nodes.

UK children's TV producers get £60 million funding boost
Producers of children's programming in the UK will be able to fund up to half of their production costs from a new pilot fund worth £60 million ($81 million) over three years.

Touch screens provide display-enabled features

Smart speakers are an emerging application today, ever since Amazon released its Echo series of products in November 2014. After Amazon, Google announced Google Home in November 2016. Other brands, such as Microsoft (by Harman Kardon), Apple, Samsung, and LG, are also developing their own products.

IHS Markit expects huge growth in 2018 for the smart speaker market, but long-term demand remains uncertain. The key attraction and differentiation is to have a speech-based assistant—not to make a speaker that simply establishes a wireless connection. After all, there are already many similar products, like smartphones and portable media players, that can connect via Bluetooth, Wi-Fi, or NFC (Near Field Communication).

Powerful companies with assistant products—such as Amazon (Alexa), Google (Assistant), Microsoft (Cortana), and Apple (Siri)—use the smart speaker as a testbed to introduce machine intelligence and assistance based on two-way speech communication with home users. Their goals are the IoT-connected smart home and changing user behavior.

A new feature for smart speakers is the built-in touch display, in addition to the essential features of speakers and microphone. At CES 2018, Google highlighted its Smart Display platform.

Amazon Echo product series

The Amazon Echo smart speaker application introduced by Amazon at the end of 2014 combines speaker and interactive assistant functions. Communication between user and its speech-based assistant, Alexa, is two-way and semantic, compared to Google Now’s ability to accept voice commands alone.

Amazon launched the Echo product series not only to promote its services (amazon.com and Prime) but also to introduce Alexa into the home and daily lives of its users. The Echo products cover many segments and scenarios, with the latest product lineup including the Echo Dot ($49.99), Echo ($99.99), Echo Plus ($149.99), Echo Spot ($129.99), Echo Show ($229.99), and Echo Look ($199.99).

In the Amazon Echo series, only Echo Show and Echo Spot have touch screens. Echo Spot has a 2.5 inch round display that can provide display-enabled features, such as a music menu, video calls, Amazon video clips, weather, clock, and smart home control panel. The compact Echo Spot (104 mm × 97 mm × 91 mm, 419 grams) looks like a smart and stylish desk accessory. The more expensive Echo Show has the same features as Echo Spot, but with a larger 7 inch touch screen and dual 2.0 inch speakers powered by Dolby.

If not for its enhanced microphone array and Alexa, the Echo Show looks like a 7 inch tablet PC equipped with a pair of speakers. Amazon does not want to make this touch-enabled Echo a tablet PC; it specifically hides the web browser from end-user access. Amazon’s strategy is to offer affordable products to make users familiar with the speech-based assistant, so that assistant services become dominant in future IoT-ready home environments and lives.

Google has the same strategy as Amazon—in this case to promote Google Assistant with the Google Home smart speaker. The strategy is the same with the other brands and their corresponding digital assistants, such as Microsoft (Cortana) and Apple (Siri).

Many similar smart speaker products have been announced to date. Some are compatible with Google Assistant or Amazon Alexa, and some look like speakers with a display and the Android OS system, which also has Google Assistant.

Google Smart Display platform

The Google Smart Display platform was released at CES 2018. It looks like a larger touch-enabled smart speaker, even though Google refers to it as a display. Lenovo products, for their part, have 8 inch and 10 inch options. The Google Home series products do not have touch screens. Meanwhile, Smart Display features Google Assistant, like the Amazon Echo Show having Alexa. Google Assistant, released in May 2016, is a speech-based user interface like Google Now, but it can engage in two-way communication.

Google Assistant was first installed in Google Home (released November 2016) and Google Pixel/Pixel XL (released October 2016), and has been available on third-party Android devices since February 2017. A new and attractive feature, it is also a critical high-level strategy. Google is shifting its popular search engine user interface to use speech-based intelligence to strengthen control over user behavior—which means extending the company’s profitable advertising business with a new user interface.

The Google Smart Display by Lenovo looks like a tablet PC with a 10-watt full-range speaker and Google Assistant; its touch screen is the primary difference from Google Home. It is like the Amazon Echo Show, but equipped with Google apps and services. This Smart Display platform, released at CES 2018, has been delivered to some third-party partners for them to make compatible products, such as Altec Lansing, Bang & Olufsen, JBL, Lenovo, LG, and Sony. These products will be shown in Q2 or Q3 later this year.

To this end, the Smart Display is focused on the IoT home appliance space, rather than working as a new tablet PC. The OS platform is Android Things, optimized for IoT applications, which means users cannot install apps, unlike on Android smartphones. Lenovo offers two models: the 8 inch HD 1280 × 800 ($199.99), and the 10 inch FHD 1920 × 1200 ($249.99).

Like Amazon Echo, the Google Home and Smart Display products are Google’s strategy to expand Google Assistant's coverage. Hardware brands are interested in making compatible products to reach new markets. End-users will likely appreciate the touch display for the visual information and feedback being provided.

Overall, Smart Display products must demonstrate long-term usefulness if they are to avoid the fate of digital photo frames, which exploded onto the scene in a flash and then declined just as quickly. In comparison, smart speakers are simply the starting point for Amazon and Google, with both companies expecting assistants to eventually become part of all consumer applications—and not just smart speakers.

IHS Markit tracks the latest technology and market developments on built-in touch displays in our Touch Panel Market Tracker.

David Hsieh is Research & Analysis Director within the IHS Technology Group at IHS Markit

Posted 23 February 2018

Manufacturers should develop solutions that offer customers flexibility to adapt and scale to their needs

In the fight to secure networks from malignant attacks, electronic access control has historically been the first line of defense in cyber security. Designed to regulate access to a network, the electronic access control system denies potential hackers access to the physical location of IT hardware, in the process protecting assets from a number of potential cyber vulnerabilities.

However, in recent years increasing numbers of security systems are being integrated with IT systems and networks, resulting in physical security systems also becoming susceptible to remote cyber attacks. Shipments in 2015 of IP-enabled controllers and edge-based devices accounted for 39% of the total global market for access control door controllers, but both devices combined will account for a majority of the global market by 2021, IHS Markit forecasts.

Manufacturers today of electronic access control systems currently have many methods to help safeguard their systems from virtual attack. Some of the most common methods used at present by manufacturers include adopting more secure physical credentials, encrypting reader and panel communication, and educating end-users and installers on cyber-security best practices. But in many cases these actions are not enough or are too expensive, or the methods are implemented incorrectly by the either the installer or end-user.

The result is a constant search by manufacturers in the battle against cyber threats to develop and deploy new tools to aid end-users of electronic control access systems. Unfortunately for manufacturers, developing software patches that can be applied across the entirety of their product portfolio is expensive.

So, how can they offset this cost without damaging profits? Increasing equipment prices is undesirable, as a significant portion of potential customers are unwilling to pay more for systems even if they are marketed as “more cyber secure”. Another option for manufacturers would be to develop a wider range of products that cater to the large variance in appetite for cyber-secure systems, but this likewise would be costly for makers.

IHS Markit believes that the solution cannot be found by using the same pricing and business models of the past 20 years. Instead, manufacturers should look toward developing “software as a service”—or even “cybersecurity as a service”—solutions that offer end-users the flexibility to adapt and scale access control systems to suit their own needs and cyber-security risk tolerance. Manufacturers can also offer a tiered service solution, slowly transitioning end-users to higher, more expensive levels of the service as they educate customers on the many dangers posed by cyber security threats and attacks.

In return for recurring payments, manufacturers could provide software and services that include the examples below:

• Penetration testing toolkits: software provided to the end-user, or run by the manufacturer on the system remotely, to test for common easy points of access to the system via the network
• Workshops and seminars for end-users: system owners could be invited for events, conferences, or even webinars to become educated on cyber-security best practices
• Cybersecurity reporting: annual or quarterly reports, as well as action plans and recommendations on how to help protect systems
• Access control software add-ons: software that incorporates data analysis or dynamic risk-score modelling to require additional authentication, following periods of irregular activity or commands and requests—applicable at credential-holder level to check access requests, as well as at admin level to protect against unauthorized users attempting to communicate with equipment via the network
• Software/firmware updates and patches: could be increased in frequency following a paid subscription, even though in many cases already provided to end-users for free
• Cyber-security monitoring: full-time supervision of access control systems to monitor irregularities and threats, as well as being on hand to respond to attacks. Manufacturers can even outsource most of this service to an alarm monitoring company

Jim Dearing, Senior Analyst, Security Technology, within the IHS Technology Group at IHS Markit

Posted 23 February 2018

Foldable displays are a possible alternative to curved or flat flexible AMOLED displays

Foldable organic light-emitting diode (OLED) stepped into the limelight at the Consumer Electronics Show (CES) in 2013 when Samsung Electronics unveiled a video that demonstrated a tablet with foldable OLED display technology.

Since then, several companies have rushed to produce various prototype foldable OLED displays at exhibitions and conferences. A few panel makers even pledged to mass-produce foldable OLED displays competitively, but to date, none has fulfilled that pledge. This is because panel makers have encountered a few issues that have negatively affected the practicality of foldable OLED display technology, IHS Markit believes.

Consumers are interested in whether these new mobile devices will be well designed, lightweight, thin, and feature a simple, uncomplicated structure. For their part, mobile brands want panel manufacturers to provide foldable displays with an extremely low bending radius (less than 1-3 mm) for the panel makers to produce a thin and simple foldable device.

Here an important distinction arises. A flexible active-matrix organic light-emitting diode (AMOLED) panel lends itself to being easily folded. In comparison, a flexible AMOLED module—which includes the panel, polarizer, touch sensor, and cover lens—cannot be easily folded due to its low flexibility. For instance, one can imagine how easy it is to fold a piece of paper. Cardboard, however, is not so easy to fold without causing wrinkles.

Maturity of key technologies

To complete a foldable OLED display, the panel manufacturer must create a simpler and thinner module structure. This typically results in reducing the thickness of the module by replacing the conventional structure of the polarizer, touch sensor, and cover lens.

• A cover lens is usually hard-coated glass, but it can be as thick as 0.350 mm. Panel makers are trying to replace it with ultra-thin glass or colorless polyimide, which is much thinner than a conventional cover.
• Film add-on touch was initially applied to flexible AMOLED displays, but was replaced in 2017 with touch sensors on thin film encapsulation, which is much thinner for curved-edge structures without a touch-base film.
• It is difficult to reduce polarizer thickness and to change its structure or material while maintaining the optical characteristics. As a result, panel makers are considering the use of innovative polarizing structures, such as a coating polarizer.

If the above improvements are achieved, the thickness of flexible AMOLED modules conceivably could be reduced to approximately 0.5 mm—thin enough to be foldable.

At present, however, the innovative solutions under consideration are not mature enough in their current form for panel makers to launch foldable displays. Consider:

• Colorless polyimide is more flexible, but it also has lower optical characteristics than glass (transparency). And because its surface is not hard enough to prevent scratches, the material requires hard-coating, which reduces flexibility.
• Ultra-thin glass is also flexible, but less so than plastic, and it is fragile. Therefore, it can be used only for foldable displays with a larger bending radius than that of plastic.
• Touch sensors on thin film encapsulation need to be more reliable to endure repeated folding.
• Alternatives to the current polarizer used in AMOLED displays cannot yet fully satisfy required optical characteristics.

Smartphone brand concerns

In 2017, Samsung expanded the application of flexible AMOLED displays to all its flagship smartphones, including the Galaxy S8, S8 Plus, and Note 8. Samsung is expected to continue this strategy in 2018. Meanwhile, Apple waited until 2017 to introduce its first iPhone with a flexible AMOLED display in 2017, but is now playing catch-up with the expected launch this year of two iPhones with flexible AMOLED displays.

For now, both the Galaxy line of smartphones from Samsung as well as Apple’s iPhone are not under threat from the flagship smartphones of any other brand—yet. So, how likely would they risk currently guaranteed flexible AMOLED smartphone demand for their products, and instead chase after the new foldable display technology?

One question to consider with foldable technology is that smartphone brands usually manufacture tablets as well. And because foldable devices typically merge both large and small display applications—i.e., a tablet and smartphone—introducing foldable devices to consumers could quickly ruin the tablet market. That, in turn would hurt smartphone brands.

Another consideration is that smartphone brands will likely need to add mechanical parts to foldable devices to help control the folding movement, since moving parts usually increase the risk of defects—compared to, say, a bar-type smartphone—the smartphone brand must guarantee against those potential defects. This increases the responsibility of manufacturers, since they cannot afford to displease their customers—the brands—with low-quality fare.

Finally, in launching a foldable device, the brand must be careful with how it is priced. Current flagship smartphones with a 6 inch flexible AMOLED display can often cost more than $1,000. What, then, would be an attractive price point for a foldable device sporting an 8 inch display and a handful of innovative technologies? While foldable devices might justify lofty pricing, brand must still carefully consider an appropriate pricing level to avoid sticker shock for the consumer.

Given these various considerations, smartphone brands would do well to prepare for the market to change first before launching foldable devices.

Foldable devices may be launched in 2018, but…

Foldable displays are a possible alternative for those panel makers prepared to replace demand for curved or flat flexible AMOLED displays. Yet there is good reason to believe that panel makers will choose to delay launching foldable AMOLED displays for now. On the one hand, panel makers are enjoying sufficiently high demand for flexible AMOLED displays without having to resort to a new technology like foldable AMOLED in a bid to retain or entice consumers. On the other hand, the components in foldable AMOLED technology won’t be at a stage that can be deemed reliable anytime soon this year.

All told, IHS Markit is forecasting that foldable displays are still projected for launch in 2018, but shipments will be extremely limited at 1.2 million units. By 2024, foldable displays will make up 7.4% of total flexible AMOLED shipments.

To be sure, the high cost of foldable AMOLED modules will make foldable devices expensive, which could limit demand. A plausible scenario for future demand will likely start with out folding models first being introduced to the market, gradually giving way to more desirable in folding as well as in and out folding models.

David Hsieh is Research & Analysis Director within the IHS Technology Group at IHS Markit
Posted 9 February 2018

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As IHS Markit forecasts in the Large Area Display Price Tracker, TV panel prices will continue to fall in Q1 2018 before stabilizing in Q2. However, the fall will be small compared to the steep drop in H2 2017 because of a more balanced supply and demand during this time.

Even so, TV makers are expressing optimism about the 2018 market in anticipation of a strong TV replacement cycle. The hope is that consumers will purchase LCD TVs given their lower retail prices and the popularity of increasingly large TV screens.

The market's difficulties started in June 2017 after a long and painful collapse in TV panel prices, translating into pain for all supply chain players, from panel manufacturers and TV set makers, to TV brands and OEMs. Falling panel prices mean a drop in the TV-set business, and the difficulty in predicting how low prices could go only serves to aggravate an already challenging and uncertain situation.

Yet there are many signs that the market is once again on the mend and improving, with panel prices projected to stabilize and increase. There are even expectations of a tight market in Q2, despite worries about new capacity in China involving the ramping up of two Gen 8.6 fabs and one Gen 10.5 fab.

The various factors influencing TV panel prices for the first half of 2018 are discussed in greater detail in the following sections below.

Q1 a slow season for panel purchases

Uncertainty about Q1 2018 has made TV makers sensitive to supply chain dynamics. Initial surveys had shown some TV brands to be cautiously optimistic, forecasting Q1 panel demand to be similar to-or slightly higher than-what was seen during the same time in 2017. But Q1 this year has proven to be slow, after all, in keeping with the traditional movement of the market at this time of the year.

As a result, China's top six TV makers are now projecting a decline of 16% in their panel-purchasing volume compared to levels in the previous quarter. Moving forward, their confidence in the market will depend on how their negotiations with panel makers turn out, with TV manufacturers hoping they can continue driving consumer sales through more attractive TV prices and features.

New LCD TV capacity coming in Q1

BOE officially launched its B9 Gen 10.5 fab (2940 × 3370 mm) located in Hefei in December 2017, after hosting a grand ceremony to launch 65‑inch panels. BOE intends to use the Gen 10.5 only for the 65‑inch, with no other panel photomasks prepared for the Gen 10.5.

Just the same, doubts remain about how BOE will be able to smoothly ramp up the giant glass-substrate fab. For one, the Gen 10.5 substrate can produce 65‑inch panels 8-up, which amounts to approximately 90,000 substrates per month. Volume like that could add some 7 million 65‑inch TVs to the global supply of 65-inch sets-a tremendous impact on that market, to be sure. And even if the Gen 10.5 fab ramps up well, BOE-being a newcomer to the 65-inch space-must stay flexible with its open cell price for the company's 65-inch sets to be designed-in.

New LCD fab capacity will also be coming from two other new fabs within the China Electronics Corp. (CEC) group, both enjoying government support. These are the oxide TFT LCD Gen 8.6+ (2290 × 2620 mm) fab of CEC Panda in Chengdu; and the a-Si TFT LCD Gen 8.6 (2250 × 2600 mm) fab of CEC Caihong Optoelectronics Technology (CHOT) in Xianyang.

The CHOT fab will start with the 32‑inch, and then it will go into production for the 50‑inch. For its part, the Chengdu fab will start with the 50‑inch, after which it will branch out to include the 58‑inch. Both locations are scheduled to go into mass production beginning in April 2018.

While the 50‑inch panel market is facing some oversupply, and panel makers like Innolux and AUO carry panel inventory looking forward to sales, the new 50‑inch supply from China will affect panel prices in the next couple of months.

TV OEMs remain cautious

TV brands and OEMs with a clear seasonal demand pattern in the global market are negotiating with panel makers to lower panel prices more aggressively in Q1 and Q2 2018. They expect seasonally weak demand to either pressure panel makers- especially those that plan to keep fabs at high production in Q1-or to push back scheduled fab maintenance. However, panel makers have not agreed to offer more price concessions, so the situation is currently at a stalemate.

Just the same, some panel prices may hit bottom in Q1, and these TV makers remain cautious about refilling panels since prices are still on a downward trend, in line with expected market behavior during the first quarter of every year.

Panel makers are carrying inventory but aren't reducing capacity utilization

According to the Display Production and Inventory Tracker, panel maker inventories soared in Q4 2017 because of two reasons: the decrease in TV panel shipments, as well as continued capacity utilization. Some panel makers are holding very high inventories of the 50‑inch, at some 1.8-2.0 million units, which is likely to put intense pressure on similar sizes over the next couple of months. Some TV makers expect price cuts for the 50‑inch in Q1 2018 because panel makers will need to clear inventory before the market is able to change.

Despite the drop in TV panel pricing in H2 2017, panel makers continue to enjoy small profits or at least break even, depending on their product offerings. This is one reason why they do not want to reduce capacity utilization, which would jeopardize profitability and cost.

And because they did not cut capacity, some panel makers then slashed prices on the 40‑ and 43‑inch in October and November 2017 for strategic customers, aimed at keeping their inventory low. As a result, panel demand has recovered somewhat, even though TV makers remain cautious about adding panel inventory because panel prices are still on a downward trend.

If panel prices for the 40‑ and 43‑inch fall below $100, panel makers will likely lower the priority in production of these sizes. Yet some TV makers sense that supply for the two sizes may suffer constraints in 2018, especially since some market demand for the 32‑inch is shifting back to the 40‑inch class.

For 65‑inch TV panels, price reductions were significant in Q3 2017. Aggressive pricing continued in Q4, with TV makers continuing at that time to ask for price concessions. Seasonal demand for the 65‑inch is driven by lower prices and promotions, and brands that take advantage of those benefits become more favorably situated to sell larger, feature-rich TVs. As a result, some panel makers had no intention to lower prices by much on 65‑inch panels during late Q4 2017 and in Q1 2018. This means that 65‑inch inventories remain mostly with TV set makers.

Foxconn Sharp continues growing its TV business

Foxconn's aggressive targets have been challenging for Chinese TV makers. The company altered the 2017 competitive landscape in China, and it will affect the 2018 global landscape. Foxconn Sharp will miss its very aggressive stretch shipment target for the Sky Tiger project in China in 2017, but it will achieve the still-impressive baseline target of close to 10 million total global shipments in 2017. Last October in China, Foxconn launched another captive brand, InFocus, featuring sizes from Innolux (32-, 40-, and 50‑inch) with an aggressive shipment target of 600K for 2018. While Sharp grows its TV shipments in China, other TV and internet brands in China are losing momentum.

In its initial plans for 2018, Foxconn had wanted to put more resources toward growing market share in Asia Pacific while also penetrating Europe and entering the North America market. However, the manufacturer recently decided to upsize its business plans for China while scaling back in 2018 on expanding its market share in other regions.

Foxconn Sharp has been aggressive with retailers in China, offering them Sharp TVs on credit to be paid after they are sold to consumers. It is also offering more competitive prices to retailers, putting intense pressure on Chinese top-tier TV brands.

The sales performance of the Sky Tiger project has been good in China in 2017, leading Foxconn Sharp to expand market share in China in 2018. Its latest December business plan increased the 2018 shipment target in China to over 9.5 million units, which would effectively double the volume of shipments from the estimated 4.8 million at the end of 2017. Foxconn has also designated a target for InFocus of 2.5 million units in China for 2018, which would set the LCD TV business plan in 2018 of Foxconn Sky Tiger at 12 million in the country-a demonstration of the astonishing ambition of Foxconn to lead the TV business in China. By adding shipment targets for other regions, the stretch business plan of Foxconn expects its captive brands-Sharp and InFocus-to ship about a total of 19 million units in 2018.

While Foxconn Sharp continues to negotiate with Hisense to return the brand licensing for Sharp, our research shows that Foxconn has a new strategy for accessing the North America market via new brands that will launch during 2018. These will include:

• Flying Eagle (65- and 70‑inch) with embedded Amazon Fire TV
• InFocus (50-, 60-, and 65‑inch), likely with Roku

To achieve its aggressive shipment target, about half of the shipments will use Innolux TV panels. This could mean a big win for Innolux in 2018.

Samsung Display, LG Display face insufficient Gen 8 (Gen 8.5) capacity

Panel makers in South Korea foresee insufficient capacity in H1 2018, especially for Gen 8.5. LG Display converted some Gen 8 capacity to OLED, which led to a reduction in its TFT LCD capacity.

The next two sections describe the effects of demand and remodeling that are affecting the ability of Samsung and LG Display to provide enough panels. In turn, this has brought about more demand but less supply.

Samsung Display, LG Display face good panel demand in Q1 2018

Demand in H1 2018 for TV panels is looking good and is improving, even as panel makers Samsung Display and LG Display almost experienced a loss in December 2017 because of the crash in panel pricing during H2 2017. Korean panel makers have since indicated that demand for their panels in H1 2018 will be better than initially expected. According to the current monthly demand forecast, good demand in January and February demand is helping to mitigate the effects of a traditionally slow season at the start of every year. On top of that, the market is then expected to recover in March and April. Samsung Display is receiving stable and sustainable orders from Samsung Visual Display, based on the agreement between the two for 2018. Samsung Visual Display makes products like smart TVs, as well as B2B displays for the hospitality industry and for settings that require large-format displays.

Korean panel makers intend to stabilize panel prices for H1 2018 so that they can return to profitability. They hope to stabilize 32‑ and 55‑inch panel prices from December to Q1 2018, even though some panel makers reportedly have excess 40‑ and 50‑inch inventory, which will drive prices down in the first quarter. And while Korean panel makers do not intend to follow the trend by others in the industry of lowering 50‑inch prices, they plan to stabilize 49‑inch prices. This is because demand for Korean-made 55-inch UHD panels is improving. As a result, Korean makers are inclined to reduce production of the 49‑inch in favor of the 55‑inch, if the former faces price pressure from the 50‑inch.

Meanwhile, 55‑inch demand from China, Europe, and Asia is improving, and many set makers and system integrators are requesting more panels from LG Display.

Korean fab remodeling in Q1 2018 will curb capacity

Korean panel makers will begin remodeling their Gen 8 lines in Q1 2018, a move that may reduce supply:

• With the Phase 1 remodeling of Samsung Display's Gen 8 fab in Suzhou, China, the fab will switch from making 49- and 55‑inch to producing more 65+32‑inch multi-model glass (MMG). Production of the 49‑ and 55‑inch will move to Korean L8.
• The Samsung Display T7 fab remodel will enable the company to make more 75‑inch panels. The plan is to increase 75‑inch production in the L7-2 fab, and reduce production of other sizes.
• The LG Display P7 fab will increase production of the 75‑inch, with the fab remodeled for u-IPS-type panels. The photo alignment process to be used is projected to produce better contrast ratio and response times.
• The LG Display Guangzhou Gen 8 fab will produce more 65+32‑inch, so new exposure machines will be installed.

TV brands stay conservative while BOE's Gen 10.5 fab ramps up

BOE had its Gen 10.5 "lighting up" ceremony back in December-showing samples (65‑inch/75‑inch 60 Hz/120 Hz 8K) to major clients It invited many customers, such as Samsung, LG, Sony, Vizio, Skyworth, Konka, Hisense, Changhong, TPV, Xiaomi, and Haier.

Korean panel makers, however, have a conservative take as to how fast BOE will be able to ramp up its Gen 10.5 fab and influence 65‑inch supply/demand. They believe it will take longer, counter to the claims of BOE, because of issues relating to IPS rubbing and ultra-large glass substrates.

Meanwhile, both Korean brands have 65‑inch UHD panel inventory, so Samsung and LG are not in a hurry to use a new supplier. Still, the process of qualification by BOE could change priorities for the Korean giants.

Restructuring of older fabs expected

As Chinese capacity keeps ramping up, pressure also grows to restructure the old fabs. More Gen 5-and-below fabs-along with Gen 5 fabs in Korea, Taiwan, and Japan-are planned for restructuring or shutdown.

However, a greater impact on the market occurs in the event of a restructuring by big fabs, like Gen 7 or Gen 8. People remember how Samsung Display's restructuring plan for its L7-1 fab during Q4 2017 influenced supply/demand as early as H1 2016, with companies taking preemptive measures months before the restructuring began.

At present, there are many rumors running wild about large-generation fabs supposedly in line for restructuring this year, which likely will influence panel prices.

International sports events to stimulate the market

As described in the "Display industry 2017 summary and 2018 outlook," sports events stimulate demand for larger TVs. There are two events of note in 2018: the Winter Olympics in South Korea, and the FIFA World Cup in Russia.

The TV display supply chain is expected to prepare for World Cup TV promotions in the latter part of Q1 2018. TV makers will want to drive larger-sized TV shipments, but adoption of larger sizes in Europe is slower than in North America and China. There is still good demand for sizes below 50‑inch, so TV makers will need to secure a competitive supply base for smaller sizes like 23.6- and 32‑inch to catch potential incremental World Cup demand.

For their part, global top-tier TV brands are likely to focus on larger sizes (over 55‑inch UHD). Chinese brands TCL and Hisense are World Cup sponsors, so promotion and marketing tied to the event will stimulate the Chinese market as well.

TV replacement cycle to start anew

Some TV makers believe that a new TV replacement cycle is beginning to kick in again; the last significant growth in the TV market was in 2009-10. At that time, TV shipments rose 10% in 2009 and 21% in 2010 from their year-ago levels.

Replacement cycles in the television market range from 7 to 10 years, which means a new replacement cycle could start this year.

The replacement market will be driven by changes on several fronts: from FHD to UHD, 4K to 8K, smaller to larger TVs, and high-end LCD to high-end OLED.

David Hsieh is Research & Analysis Director within the IHS Technology Group at IHS Markit
Posted 16 March 2018

While active-matrix organic light-emitting diode (AMOLED) displays are increasingly adopted for high-end and midrange smartphones, a shift in the panel’s substrate type and touch sensor structure is occurring, going from rigid to flexible, according to the latest Touch Panel Market Tracker Report by IHS Markit.

For instance, shipments last year of flexible on-cell AMOLED display for mobile phone applications reached 96.3 million units, up a resounding 154% from 37.5 million units in 2016. During the same period, shipments of rigid on-cell AMOLED displays fell to 213.5 million units, down 31% from 307.2 million units. The main driver of the surge last year in flexible AMOLED panel shipments was Samsung Electronics, which applied flexible on-cell AMOLED displays to all its flagship smartphone models—namely, the Galaxy S and Note series.

Overall, rigid on-cell AMOLED panels accounted for 14.0% of global panel shipments for mobile phones in 2017, a significant drop from 20.2% in 2016. Meanwhile, share of flexible on-cell AMOLED displays rose to 6.3% from 2.5% during the same period.  

In the case of Samsung’s main competitor, Apple did not adopt the mainstream on-cell touch sensor structure for the 5.85-inch flexible AMOLED panel in its iPhone X. Instead, Apple has continued to use GF2, the same touch sensor structure it deploys in the iPad series. GF2 has a film substrate with a patterned double-sided indium tin oxide (ITO) sensor, located right below the cover glass. In contrast, Samsung Display and LG Display both put the film substrate beneath the display’s polarizer. Because of Apple, GF2 immediately took 3.6% of total panel shipments for mobile phones, causing shipments in 2017 of all flexible AMOLED displays, including on-cell touch and GF2 type, to account for 9.9% of the global total, up from 2.5%in 2016.

For Samsung Display, a leader in AMOLED display production, what it should do is to speed up the transition to flexible AMOLED display so that it can compete with Chinese panel makers that are expanding capacity fast. Flexible AMOLED technology has become a critical differentiation for Samsung Display as well as mobile phone brands’ high-end models. Despite the two different touch sensor structures, applied to the flexible AMOLED panel, both are expected to keep growing.

Following Samsung’s example, LG Display also started producing flexible on-cell AMOLED displays in 2017. And although LG shipped less than 3 million units in 2017, shipment growth in the future is highly expected. 

For more details, see the Touch Panel Market Tracker Report by IHS Markit, which provides a variety of in-depth analyses on the touch panel market, including touch user interface technology, market dynamic and emerging trends.

Calvin Hsieh, Director of Touch and User Interface Research within the IHS Technology Group at IHS Markit
Posted 6 April 2018

The Samsung Galaxy S9+ carries a bill of materials (BOM) cost of $375.80, a new IHS Markit teardown shows. But although $43 more than the BOM for the company's previous "star" smartphone, the Galaxy S8+, the higher cost structure of the S9+ offers consumers better specs at about the same retail price point as the S8+.

"The higher total BOM cost for the Galaxy S9+ is driven primarily by rising prices for DRAM and NAND flash memory, as well as the smartphone's more impressive dual-lens mechanical aperture camera module," said Andrew Rassweiler, senior director of cost benchmarking services for IHS Markit. The S9+ also has a brighter screen, Rassweiler added, than last year's radically redesigned S8 with its large Infinity Display.

The unsubsidized retail price for a 64GB Galaxy S9+ starts at $839.99. The S9+ features a 6.2-inch display, 64 gigabytes (GB) of storage, and 6GB of RAM. In comparison, the smaller S9 has a 5.8-inch display, and less RAM at 4GB, even though storage is the same at 64 GB. IHS Markit has not yet performed a teardown analysis on the smaller Galaxy S9.

Extraordinary camera module

The most noticeable new feature of the S9+ is its 12-megapixel dual-lens camera, which includes the first variable-aperture system built into a smartphone. This dual-mechanical aperture supports F1.5 and F2.4, image over-sampling and 960 frame-per-second slow motion, which provides better results in low-light conditions and supports hardware-based shallow depth-of-field effects.

The combined BOM cost for the primary, secondary, iris camera, and other modules is $44.95, of which $34.95 is from the new primary camera.

"The extraordinary primary camera module in the Galaxy S9+ costs much more to manufacture than most camera modules we have priced in the past," Rassweiler said. "Camera technology improvements continue to be a primary budget focus and performance differentiator for smartphone manufacturers."

Among the first smartphones to feature Snapdragon 845

Upgrading from last year's CAT16 Snapdragon 835 processor, the Galaxy S9+ features Qualcomm's Snapdragon 845, which contains an LTE CAT18 modem. The device accommodates peak LTE speeds of up to 1.2 gigabits per second with support for six-carrier aggregation and 4x4 MIMO. The Snapdragon 845 features second-generation 10-nanometer lithography from Samsung foundries.

The complete, bundled Qualcomm chipset solution, including all supporting components from Qualcomm, is estimated to cost $67.00.

Improved security

Samsung relies on a smart face-lock in the Samsung Galaxy S9+, which requires both an iris scan and a two-dimensional face image to unlock the device. This new "Intelligent Scan" mode means that either one or the other process will be used to unlock the device, depending on lighting conditions or the action being performed.

The rear fingerprint sensor has also been rearranged in a more symmetrical and ergonomic position than in the previous Galaxy S8+ model.

Brighter AMOLED display, upgraded wireless charging

Samsung displays are always a showcase for the company's internally sourced components, and the Galaxy S9+ display is no different.

Its 6.2-inch Quad HD+ Super AMOLED features 2960 x 1440 resolution and 529 ppi, while providing 700-nit brightness, which is slightly higher than last year's Galaxy S8+. The entire display comes with a BOM cost of $79, also the most expensive component in the device.

Wireless charging has been upgraded from 7 watts in last year's model to 15 watts in the Galaxy S9+.

The Teardowns and Cost Benchmarking Intelligence Service from IHS Markit provides complete, detailed analysis of electronics-from small devices, such as wireless handsets and tablets; to larger equipment such as servers and automotive infotainment systems-delivering a comprehensive assessment and cost breakdown of all electronic, electro-mechanical, and mechanical components.

IHS Markit analysts have performed more than 3,000 teardowns, identifying and pricing millions of components, as well as producing more than 120,000 teardown photos over time.

IHS Markit Technology Expert
Posted 11 April 2018

When the subject of healthcare is discussed, among the players that immediately come to mind are familiar names in the medical or pharmaceutical world-the likes of GE, Philips, and Siemens, all of which have long and storied accomplishments in the field.

However, what many do not know is that healthcare today is also drawing active participation from companies not traditionally associated with the healthcare sphere-entities, for instance, from Silicon Valley known more for their technological prowess and innovation.

Case in point: At the recent HIMSS Conference, some of the big technology firms in attendance included Amazon, Cisco, Google, IBM, Microsoft, Qualcomm, Uber Health, Verizon, and Intel-each one eager to demonstrate the value it brings to healthcare through current products, services, infrastructure or investments.

Based in Chicago, HIMSS represents some 70,000 individual members, 630 corporate members, and more than 450 non-profit organizations. The HIMISS 2018 show, held in early March in Las Vegas, sought to provide a forum for discussing today's most pressing health information and technology challenges, while also offering members and healthcare professionals networking opportunities and a chance to see new healthcare products and solutions.

New faces on the block

A slew of tech firms is making its presence felt in healthcare.

Amazon, through its Amazon Web Services (AWS), provides healthcare organizations in nearly every country with relatively low-cost IT infrastructure via the public cloud. More recently, Amazon announced it was forming, together with Berkshire Hathaway and JPMorgan Chase, an independent healthcare company to serve the needs of US-based employees of the three companies.

For its part, Microsoft allows researchers and clinicians to use its Azure cloud computing service to access genomic processing services. It collaborates with St. Jude, where genome therapy is part of the precision medicine practice for neonatal care and oncology units. St. Jude, in turn, uploads anonymized genomes to public data repositories.

Meanwhile, Google is expanding its own Google Cloud Services by launching the Cloud Healthcare API, which hopes to address interoperability challenges in healthcare data. The new API provides scalable infrastructure to ingest and manage various types of healthcare data, including HL7, or Health Level 7; FHIR, or Fast Healthcare Interoperability Resources; and DICOM, or Digital Imaging Communications in Medicine. Providers can use that data for analytics and machine learning in the cloud.

And the list goes on.

Chipmaker Qualcomm aims to provide more timely and accurate bedside information via its Capsule Vitals Plus solution. IBM Watson Health provides advanced analytics to make healthcare-related operations more productive. Verizon is developing an end-to-end solution for connecting patients to health-related environments. Uber Health enables healthcare organizations to coordinate rides for patients, caregivers, and staff. Intel is enabling predictive clinical analytics and AI. Cisco and its contact center technology is used for patient-provider contact through video and voice.

And Apple, though not at the HIMSS event, is preparing to expand into healthcare for its employees and their dependents with a network of clinics called AC Wellness.

Important reasons for participation

What is the significance of more visible involvement in healthcare by the large, multi-vertical technology players?

In the case of big cloud providers like Amazon, Microsoft, and Google, these companies already provide better security measures in protecting valuable health-related data than what the individual health systems have shown they could do, especially in light of highly publicized data breaches suffered by healthcare providers like Anthem Blue Cross or UCLA Health.

Utilizing cloud services also allows healthcare providers to focus more on their original mission of patient engagement, and the lighter on-premises infrastructure resulting from offloading major data handling to the cloud results in less burdensome data upkeep and maintenance for healthcare practitioners. Already, 25% of healthcare data is in the Cloud, and more savings can be obtained from leveraging cloud services.

The engagement of new players in healthcare could also pave the way for fresh innovation. In turn, providers might find new methods and approaches on care delivery, improving outcomes, and utilizing consumer-generated data that help create a more complete analysis of patients.

At a clinical level, transformation can take place in the management of both structured and unstructured data, feeding CDS, PHM tools, and AI. Starting with genomics in oncology, AI is now moving into gastrointestinal, musculoskeletal, neuro, and respiratory disease. At the same time, previously untapped information in images, audio, video, narrative text, environmental data, and other unstructured content are starting to make their way into AI programs to provide insights into a wide variety of patient care.

All this activity can help to complete the continuum of care and with better connectivity. In the United States, the vast scale of the US health system poses difficult challenges, but this is no reason to avoid innovation in care provision.

And a huge market is building. Projected to reach $24 billion in 2021, up from $19 billion today, is global revenue for electronic health records (EHR), picture archiving and communication systems (PACS), vendor-neutral archive (VNA), image editing (IE) software, and associated services.

Expect, once again, a big driver for change to come from the giant tech companies, which see opportunities in the multi-trillion-dollar healthcare industry.

Shane Walker is Senior Principal Analyst, Healthcare Technology, within the IHS Technology Group at IHS Markit
Posted 18 April 2018

When the Chinese government announced years ago that it was supporting the country's display manufacturing industry in its 13th Five Year Plan from 2016 to 2020-specifically, to upgrade the manufacturing floor and develop expertise in semiconductor technology and related fields-many Chinese companies responded eagerly to the call. Working aggressively to expand their capacity in LCD as well as AMOLED, Chinese firms proceeded to build new display production fabs, aided by strong government support and subsidies.

The participating companies included established names and new players alike. The industry stalwarts included the likes of BOE, Tianma, Visionox, ChinaStar, HKC, CEC Panda, CHOT, and Truly. Among the newcomers, meanwhile, were Chongqing Blephone, Chongqing Image Tech, Holitek, AHZ Electronics, Lens Tech, and Trenso.

Changes occurred, however, at the end of 2017. Both the Chinese central government and the country's state banks started to deploy stricter rules and regulations for business loans. At the same time, lending institutions at the provincial and local levels saw their financing platforms curtailed.

Already, the policies resulting from this time have influenced the financing of several ongoing projects. Moving forward, the policies are likely to continue influencing any plans for expansion by Chinese panel makers-not only for the rest of this year but also even in 2019.

To get a better understanding of how the new regulations influence the ongoing construction and expansion plans of panel makers, it helps to know how a production line used to be funded in China under the previous rules.

Unlike geographically concentrated display production lines in South Korea, production lines in China are more likely to be spread among different locations and funded by local provinces.

To qualify for support from the local government, panel makers must establish a new subsidiary at the location where the fab will be built. Following establishment, both the owner of the new company-in this case, the panel maker-and the local government then invest in the new company, using the invested fund to start construction. Although local provincial-financing platforms are typically used to invest such funds, there remains a big financing gap given that the construction of display manufacturing fabs require billions of dollars. Here the gap will usually be filled by bank loans, with the land where construction is taking place offered up by owners as collateral for the loan. This imposes no real hardship on owners, as the land is normally bequeathed by the state to the newly formed company for free.

As shown in the figure, construction starts and equipment is installed following the initial funding. At this point, Phase 1 is accomplished. Display manufacturers then use Phase 1 equipment as the collateral to start a new round of funding as well as to obtain extra subsidies from the government. In turn, the new loan subsidizes Phase 2 of the fab construction.

New rules today

All that changed, however, with the tightening of policy at the end of 2017, as Beijing and China's state-run banks began deploying new regulations governing loan applications.The new regulations include the following:

• Much tighter control of local land use intended for constructing manufacturing facilities like fabs, so that domestic industries and housing are protected
• Strict limitations on the scope and size of local government financing platforms that previously made loans available to entities such as fabs
• More serious scrutiny of loan applications and less favorable loan conditions, such as higher loan interest rates
• Limits on the total loan amount per year that a bank could provide

More draconian than the previous guidelines, the new regulations are intended to rein in provincial deficits; prevent overheating of the housing-related real estate market; avert systemic risks to the financial sector; and deter investment in older, undesirable industries, such as oil, energy, and steel).

As a result, it is expected that panel makers will receive less funding from local provincial authorities and banks in China. By and large, the pressures of financing a fab in China are now borne by panel makers, which will eventually affect fab construction.

Overall, the impact of the new policies on fab financing will depend on the financial position of the panel maker and the fab in question.

For projects of high-performing panel makers located in big and well-funded cities, financing may not be a big issue, since panel makers and the local provincial government can fill any gaps in financing. However, as the difficulty in financing increases, local governments and panel makers may renegotiate and provide less favorable terms, with the possibility that affected fabs get built slightly behind schedule.

For the new fab projects of less well-funded companies, these may face some difficulties in financing under the new conditions and entail longer delays, even if they remain entirely feasible.

For the new fab projects of third-tier companies or new entrants, whether those lines will be built at all will depend on the disposition of the provincial government involved and the details of each fab. Fabs making use of production lines utilizing smaller glass sizes and old equipment from Samsung Display or LG Display may face more financing challenges, especially in their loan applications.

On the whole, the new business policies will serve to have a dampening effect on fab construction in China, and projects in the early planning phase are likely to be delayed by panel makers until getting funding becomes easier again.

For updates on the construction of new display fabs in China, follow IHS Markit in its coverage of the situation and market in our AMOLED and LCD Supply & Demand Equipment Tracker.

Smart home technology claims the insurance industry
But can insurance firms persuade their customers to try smart solutions?

For smart home technology to reach the projected global household penetration rate of 7.5% in 2022, all use cases must be called upon, which includes insurance companies. In 2017, only about 1% of households worldwide had a smart home device.

As consumer education expands and privacy concerns recede, insurance companies are in a unique position to offer value-added services to consumers. Like multiple-service operators (MSOs) such as Comcast and Deutsche Telekom, insurance companies and utilities have an existing customer base far bigger than that of traditional security providers, such as ADT or Verisure. Because of this, the insurance sector could play a pivotal role in deepening the penetration of smart home devices in households within the next five years.

What can insurance companies hope to gain by promoting smart home devices? For one, smart home technology can bring insurance firms closer to the consumer and potentially reduce their exposure to loss claims. And yet, consumers may balk at adopting smart home devices, inhibited by variables such as the cost of devices, discomfort or unease with a new technology, or disagreement over post-sale, contractual service fees.

Take water damage-a primary area of coverage and compensation for nearly all insurance companies. Fire damage may incur higher pay-outs, but the frequency of claims from water damage is much greater, with theft a distant third.

Because water damage is so pervasive and widespread as an insurance liability, most insurance providers resort to a dual-pronged approach-one that relies on the placement of water-leak sensors under appliances, near toilets, and under sinks, combined with the use of a water shut-off valve. In most cases, the water shut-off valve plays a crucial role in minimizing water damage and thus potentially staving off a water damage claim.

However, deploying the valve is also an expensive proposition, with installation often requiring a professional plumber. As a result, households end up deciding not to adopt this smart home solution that could help prevent water damage, leaving both the consumer and insurance provider vulnerable and exposed in the face of a flood or related disaster.

Extended pilots and other reasons bedeviling insurance

For many insurance companies, collecting data on consumers is standard business practice. But despite the treasure trove of data they possess, insurance companies thus far have struggled to obtain the kind of useful information enabling them to make effective discount and rebate offers for customers. despite a treasure trove of data in their hands. And while smart home technology can unleash yet another floodgate of information on consumer behavior, without a viable strategy or a clear understanding, many insurance companies could still be testing smart home technology in pilots for the next 1-2 years.

Meanwhile, the pilots initially conceived by insurance to run briefly as a test case of sorts end up going on to an unwelcome extended phase, leaving insurance providers to continue shouldering test costs with little visibility of the much-hoped-for payoff.

Why do insurance-implemented pilot runs become unmanageable, or worse, fail when it comes to smart home devices and solutions?

First, insurance in the United States is simultaneously highly regulated and also pliable, the latter depending on the discretion of each state. Some states, for instance, allow providers to give away devices for free, while others forbid the practice to prevent any semblance of business impropriety stemming from a giveaway. In a third scenario, regulators may allow giving devices for free if the consumer has access to the data.

A second reason accounting for extended pilots is that consumers have not been eager to use technology provided by insurance companies, likely out of wariness or distrust. In some cases, water-leak sensors were given away for free but were never installed.

A third reason for extended pilots is because insurance providers themselves are unclear on how to use the data they have collected. While some industry observers have insinuated that the insurance companies will use smart home data to deny claims, this is a false allegation and unproven as we know it-at least for now and dating back to the first few years since the practice of data collection began.

In contrast to what naysayers believe, data that is collected by insurance is not used to increase a consumer's premium. This means the deployment of sensors is primarily to reduce claims as well as engage the consumer in value-added insurance concierge services.

One example of how data could be useful to insurance is to monitor a connected smoke detector. A customer who has a smoke detector alarm go off more than four times a month could conceivably receive an alert or warning from the insurance provider on rates being increased. Alternatively, a customer with no record of smoke alarms being triggered could be eligible for discounted rates-just as a driver with a spotless driving record is likely to enjoy lower auto insurance rates.

Even in the face of potential benefits-like lower insurance rates-that could come about because of data collection, many consumers remain reluctant to subscribe to a service in which their data is provided to insurance agencies. To this end, insurance providers often must go the extra mile to assure customers of respecting their privacy, and to avoid being perceived as interlopers perpetually monitoring their customers' lives.

The challenge to deploy smart home solutions

Despite ample opportunities to offer smart home solutions in their portfolio, insurance companies have been unable to rally behind a single smart-home business model. For example, many top US insurance firms rely mostly on an Amazon Alexa Skill; or on partnerships with either professional security providers like ADT, or with do-it-yourself (DIY) systems like Canary or Frontpoint. In Europe, insurance providers have been more creative, partnering with consumer-electronics companies like Panasonic, DIY device makers such as Fibaro, or telecom operators like Deutsche Telekom.

Still, it is in the Americas where market activity will be strongest. Here, the number of home insurance policies with a smart home device attached to the contract is expected to exceed 1 million in 2018; in Europe, the 1-million mark won't be reached until 2021. Also in the Americas, home policies with a smart home device will reach a household penetration rate of 6.8% in 2022. In comparison, that rate in Europe will stand at just 1.0%.

All told, insurance companies can gain a great deal by deploying smart home technology, but they need to find a way to reach a skeptical, disengaged consumer base that remains wary of how their data will be used. The insurance companies that will find the most success will be those able to use smart home technology to bring other value-added services to the consumer. Water-leak or water-flow sensors should be a great starting point for many insurance providers-the concept is simple, and the product is possibly the most cost-effective smart solution for both the insurer and consumer.

Ultimately, the insurance sector can employ smart home technology to cultivate goodwill. Since insurance is often considered a grudge purchase, its purveyors can utilize the "smarts" in smart home technology to engage customers in a positive manner-not just when a loss is being reported.

Blake Kozak is Principal Analyst, Security Technology, at the IHS Technology Group within IHS Markit
Posted 9 May 2018