Huajin Securities: Micro LED accelerates industrialization, glasses with screens usher in opportunities.

Huajin Securities released a research report stating that the growth in demand for smart wearable devices and the rise of generative artificial intelligence large models are pushing AI audio glasses into a broader market. In the short term, with the user profile of AR glasses being relatively unclear, smart audio glasses are entering the market as a replacement for headphones, using glasses (for vision correction/decoration) as a carrier, combined with AI to enhance the experience and selling points, aiming to open up a new audio track. It is recommended to pay attention to entering various product supply chains or manufacturers with relevant technological reserves. Huajin Securities' main points are as follows: MicroLED high brightness characteristics solve the low light efficiency problem of waveguide technology Waveguides have the advantages of lightweight and high transmittance, making it easy to take the form of glasses, and are considered the most promising optical solution for AR applications. However, waveguides also have the weakness of low light efficiency, ranging between 0.1%-10% (diffractive waveguides are between 0.1%-0.3% and array waveguides are 5%-15%), with all-weather AR glasses requiring a peak luminance of 3000nit in the eye. Therefore, a high input display brightness is required, and with a light efficiency of 1%, a luminance of 300,000nit is required to achieve an eye luminance of 3000nit. If calculated with a light efficiency of 0.1%, a luminance of 3,000,000nit is required. In addition, as it needs to take the form of glasses, high requirements are placed on the display's area and volume, typically requiring a volume not exceeding 1cc (cubic centimeter), thus posing high requirements for the volume and pixel density of the display screen, typically requiring a ppi of over 4000. Monochrome MicroLED has mature mass production capabilities, and full-colorization technologies have their own advantages and disadvantages. Currently, the optical solution of Micro-LED + diffractive waveguide has gradually become the mainstream choice for AR glasses. Among them, the monochromatic Micro-LED display screen has mature mass production capabilities, bringing down costs, with Micro-LED AR glasses priced below 2000 yuan already on the market. Monochrome Micro-LED is the basis for full-color display, with the difference in the blue/green and red LEDs on the substrate also affecting the differences in bonding and substrate removal processes of monochrome Micro-LED. Currently, the full-colorization schemes for Micro-LED microdisplays mainly include the combination of colors, quantum dot color conversion, tricolor stacking, and single-piece epitaxy. (1) Combination color scheme: composed of R/G/B monochrome Micro-LED microdisplay panel and a combined color prism, the red, green, and blue monochrome microdisplay panels are mixed using a combined color prism. (2) Quantum dot color conversion: Quantum dot (QD) materials are used to convert monochrome Micro-LED colors, with inkjet and photolithography processes being the main ones. (3) Tricolor stacking: directly stack three colors of Micro-LED epitaxy, minimizing the size of each pixel. (4) Single-piece epitaxy: grow R/G/B tricolor epitaxy on the same substrate. In particular, tricolor combination is a relatively fundamental and mature route, but still needs to reduce the volume of the modules; quantum dot color conversion is currently the hottest direction for single-piece full-color research, also the simplest process in the laboratory stage, the challenge lies in increasing the light conversion efficiency, and the tricolor stacking and single-piece epitaxy schemes are technically challenging, with the overall process in the experimental stage. The coordinated development of production and academia, domestic manufacturers accelerate industrialization/continuous breakthroughs in technical research by research institutes (1) Production: Sitan Technology: In June 2024, a mass production plant of about 20,000 square meters was officially put into operation in Xiamen, Sitan Technology has set up a full chain layout from chip design to mass production process, with an annual capacity exceeding 6 million sets at the Shenzhen pilot line and Xiamen mass production line. TCL Huaxing: In October 2024, TCL Huaxing and Sanan's joint venture ChipYing Displays Micro-LED pilot line has been completed, with small-scale production expected to be achieved by 2025. BOE HC SemiTek Corporation: On November 6, 2024, BOE HC SemiTek Corporation's 6-inch Micro-LED mass production line in Zhuhai was officially put into operation. This project is the world's first scale production line of Micro-LED and the world's first 6-inch Micro-LED production line, with a capacity of producing 24,000 wafers of Micro-LED per year after full production, and 45,000kk devices. Leyard Optoelectronic: On November 20, 2024, Leyard Optoelectronic's first phase of independently developed next-generation advanced MIP production line (Note: Advanced MIP uses Micro-LED chips with no substrate and a chip size smaller than 50m, smaller than the chips used by the original MIP), was officially put into operation at the Wuxi Lijing factory. Chenxiang Optoelectronics: On December 19, 2024, Chenxiang Optoelectronics launched a TFT-based Micro-LED mass production line with an investment of 3 billion yuan in Chengdu, which includes transfer processes, backplane processes, and module processes, and released a new 135-inch Micro-LED splicing screen, as well as Micro-LED transparent splicing screen and Micro-LED light field bare-eye 3D screen. Shentianma: On December 30th, the "Tianma New Display Technology Research Institute Micro-LED production line" achieved full process integration, with plans to begin small-scale production in 2025. (2) Academia: The Optics Valley Laboratory in Hubei collaborated with Huazhong University of Science and Technology to develop high-performance quantum dot photolithography adhesive, promising a breakthrough in Micro-LED full-color display technology; a team from Hunan University, in collaboration with companies such as Noversight Technology and Jingneng Optoelectronics, developed a super-bright Micro-LED microdisplay chip and developed a single-pixel brightness of up to 10 million nits on a highly uniform silicon substrate GaN epitaxial plate. Related targets Optics: Zhejiang Crystal-optech (002273.SZ), Goertek Inc. (002241.SZ), OFILM GroupCo., Ltd (002456.SZ), Will Semiconductor (603501.SH). ODM/OEM: Goertek Inc. (002241.SZ), Emdoor Information (001314.SZ), Cosonic Intelligent Technologies (300793.SZ). Storage: GigaDevice Semiconductor Inc. (603986.SH), Biwin Storage Technology (688525.SH). Camera: Will Semiconductor (603501.SH), SUNNY OPTICAL (02382).SoC: Bestechnic (Shanghai) Co., Ltd. (688608.SH), Rockchip Electronics (603893.SH), Shenzhen Bluetrum Technology (688332.SH), Actions Technology (688049.SH), Shanghai Fullhan Microelectronics (300613.SZ). Structural components: Shenzhen Jame Technology Corp. (300868.SZ), Shenzhen Everwin Precision Technology (300115.SZ). Screens: BOE - A (000725.SZ), BOE HC SemiTek Corporation (300323.SZ), JBD (unlisted). Batteries: Shenzhen Highpower Technology (001283.SZ), Shenzhen Desay Battery Technology (000049.SZ), Sunwoda Electronic (300207.SZ), ATL (unlisted). Terminal manufacturers: Rokid (unlisted), Lebird Innovation (unlisted), Xreal (unlisted), Image Tech (unlisted), Flash Extreme Tech (unlisted). Risk warnings: - Risks associated with the uncertainty of the technology evolution trajectory and industrial ecosystem. - Sensitivity to the industrialization process of key forward-looking technologies. - Risks related to the unexpected development of content ecosystems. - Risks associated with lower-than-expected downstream demand.