Trends in VR Display Technology: The Clear Cost Advantage of Fast LCD and Accelerating Growth of Silicon-based OLED

In September 2022, the VR brand under “ByteDance” released the new Pico 4 series VR headset, followed by Meta’s release of its high-end office VR headset, Quest Pro, at its annual conference in October. Judging from the VR headsets released in 2022, hardware upgrades mainly focus on optics, head-hand interaction, chips, etc., while upgrades in display technology have been relatively slow, with Fast LCD still being the primary choice for most manufacturers. Overall, the current trends in XR display technology mainly revolve around Fast LCD, OLED, silicon-based OLED, and Micro LED, with pixel density continuously increasing and a gradual evolution from single screen to dual screen.

With cost advantages, Fast LCD remains the mainstream configuration in the market, and adding Mini LED backlighting may extend its lifespan.

Compared to OLED, Fast LCD screens have a smaller subpixel pitch, effectively reducing the screen door effect. Meanwhile, the improved Fast LCD technology uses new liquid crystal materials and driving technologies, allowing the refresh rate to increase to 90Hz, with high mass production capability and stable production capacity. The display and optical configurations are mainly four types: Fast LCD with Fresnel solution (mid-low-end product configuration), Fast LCD with Pancake solution (mid-range product configuration), Fast LCD with Mini LED backlight and Pancake solution (high-end product configuration), and silicon-based OLED with Pancake solution (high-end product configuration).According to Sigmaintell’s research and estimates, the cost ratio of the four solutions in 2022 is approximately 1 : 2.3 : 2.9 : 4.5, indicating that Fast LCD has a significant cost advantage over silicon-based OLED.

In 2022, Fast LCD technology, with its ultra-high cost-performance ratio, remains at the top of the VR display market. The new VR products from Pico and Meta still use Fast LCD. Especially Meta’s Quest Pro, priced at $1499, still chooses to use Fast LCD, which indicates the strong vitality of Fast LCD in the VR display field. According to Meta’s introduction, the VR product Quest 3, released in 2023, is positioned between $300-$500, suggesting that Quest 3 is likely to continue using Fast LCD as its display technology.

Moreover, with the addition of Mini LED backlighting, the display effect of Fast LCD can be significantly improved compared to traditional backlighting. Mini LED backlighting can greatly increase the overall brightness of the display screen while effectively shortening the OD distance and reducing the overall thickness; at the same time, with a refined Local Dimming partition scheme, higher contrast can be achieved. Additionally, due to the further maturity of Mini LED technology and the relatively small VR display area, Mini LED backlight + Fast LCD still has significant cost advantages compared to silicon-based OLED.

The resolution of OLED displays is limited by FMM technology, making it difficult to catch up with Fast LCD in the short term.

In 2016, several manufacturers, including Oculus, Sony, and HTC, adopted OLED as their VR display solution, mainly due to the high refresh rate and low latency characteristics of OLED. After 2018, as Fast LCD technology matured, OLED was gradually replaced by Fast LCD in the competition for VR display. The reason lies in the fact that FMM technology limits the improvement of OLED pixel density. The pixel density of the Fast LCD used in Pico 4 is about 1200 PPI, while smartphones like the iPhone 14 Pro Max series have a pixel density of only 460 PPI. Sony’s upcoming next-generation PS VR2 will have a pixel density of 850 PPI, which still shows a significant gap compared to Fast LCD. Therefore, before the successful mass production of high pixel density FMM, OLED is still unlikely to shake Fast LCD’s position in VR displays.

While silicon-based OLED has clear performance advantages, issues related to cost and yield still need the market to mature further.

Silicon-based OLED uses a CMOS substrate, allowing for pixel densities unattainable by regular OLED (over 3000 PPI). Additionally, silicon-based OLED is significantly lighter, being one-tenth the weight of LCD and OLED, which can greatly improve the VR user experience. However, silicon-based OLED is limited by the immaturity of supporting driver chip technology and a relatively low overall yield, resulting in high overall costs. Currently, there are still very few VR manufacturers using silicon-based OLED.

For VR displays, two 2-inch screens provide the best display effect, but the existing yield for silicon-based OLED screens of this size is very low, and the costs are extremely high. Currently, silicon-based OLED is mainly used for products below 1 inch, applied in AR headsets. Apple’s upcoming MR headset to be released in 2023 will adopt silicon-based OLED, which is bound to drive major VR manufacturers to adopt silicon-based OLED screens.Sigmaintell predicts that after Apple’s MR release, it will inevitably promote the accelerated penetration of silicon-based OLED in the XR display field.

From the supply pattern perspective, Sony is currently the largest supplier of silicon-based OLED for commercial XR headsets. With years of R&D accumulation, Sony possesses vertical integration technology strength from CMOS backplane, driver chips, to OLED processing; the silicon-based OLED screens for Apple’s MR headset in 2023 will be exclusively supplied by Sony. Mainland China is more proactive and comprehensive in the layout of silicon-based OLED, with manufacturers like Visionox and BOE already having mass production capabilities, and production capacity and yield are gradually maturing. In addition, LGD and SDC also announced this year that they will join the investment in silicon-based OLED panels. From an industrial foundation perspective, Samsung has a complete supply chain and technical reserves for CMOS driving and OLED processing, while LGD is jointly developing silicon-based OLED products with Hynix. With the addition of Korean manufacturers and the gradual production of domestic manufacturers, it is expected that global silicon-based OLED production capacity will significantly increase after 2024.

Micro LED

The closed environment of VR displays does not require high screen brightness, so silicon-based OLED is sufficient to meet the requirements of VR displays. From performance parameters, Micro LED has significant advantages in pixel density, refresh rate, and screen brightness, and is considered the best display technology for XR. However, Micro LED technology is still in the early stages of the industry, especially the colorization technology is still immature. In the short to medium term, Micro LED is unlikely to be applied in VR displays.

Innovations in functional attributes continue to impact the long-term development of the VR industry.

In 2022, VR headsets were affected by the global consumer electronics market downturn, and overall growth was below expectations. From an industry development perspective, the shortcomings of VR still lie in the market and application aspects; the overly strong gaming attributes will limit the widespread development of VR and affect the rapid iteration of hardware. In 2022, major manufacturers are also committed to continuously improving the content ecosystem of VR, with video content, fitness, social elements, etc., continuously increasing. Additionally, the increase in cameras and the innovation of head-hand interaction methods also provide possibilities for more application scenarios. Whether the innovation in VR market applications can transform VR headsets from gaming attributes to production tools will also greatly influence the enthusiasm for investment and R&D in various hardware, including displays. VR manufacturers still need to increase their development layout in application ecosystems and collaborate on upstream and downstream of the industry chain to create a larger market together.