BOE LCD and OLED Yields

Customers should consider a variable yield, with a floor, for sourcing agreements. Your onsite team could then validate the material scrap to ensure accurate yield charges.

A fab can take two to four quarters to produce at the installed capacity and with high production yield. Production yield is the number of good panels as a percentage of the total number of panels produced. At the beginning of the ramp-up process, fixed costs, other overhead expenses, labor, general and administrative and other expenses, are relatively high on a per panel basis. Variable costs, particularly raw materials and component costs, are also high on a per panel basis since production yield is typically low in the early stages of the ramp-up of a fab. Due to the low yields, there is greater waste of raw materials and components.

Upon the completion of the ramp-up process, a fab is capable of producing at its installed capacity.  Consequently, the higher output leads to lower fixed cost per panel.  Finally, higher production yields lead to lower raw material and component costs per panel.

Fabs are constructed in phases in order to allocate capital expenditures across a greater period of time. As a result, the installed capacity in the early phases of production at a new fab is typically lower than the maximum capacity that can be installed at a fab.

Tech Financial Analysis incorporates the aforementioned fixed and variable cost impact into its Cost Model. If you have questions please email us at info@techfinancialanalysis.com.

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