Cathay Pacific Haitong: The “nirvana rebirth” of the micro LED industry is expected to enter multi-scenario applications starting in 2026

The Zhitong Finance App learned that Cathay Pacific Haitong Securities released a research report saying that if the micro LED industry continues to break through in the two areas of large-scale mass production cost reduction and technical feasibility studies in optical interconnection application scenarios, it is expected that starting in 2026, we will see the gradual development of micro LEDs from smartwatch/AR smart glasses to fields such as ultra-high-end TVs and commercial displays (over 100 inches), high-end automotive HUD displays, and looks forward to continuous progress in the field of short-range communication technology in AI computing power server centers. The industry will gradually expand application scenarios and market size in the next few years.

Cathay Pacific Haitong Securities's main views are as follows:

Micro LED is known as the “ultimate display technology.” The pixel size of micro LEDs is usually between 5-100 microns. By introducing electronic excitation into the semiconductor material, photoluminescence is achieved. Therefore, their advantages include: ①, extreme performance, where each pixel emits light independently, which can achieve unlimited contrast and extremely high brightness; ②, long life, aging much slower than OLED, completely avoiding the risk of “screen burning”; ③. The energy efficiency is amazing. When black is displayed, the pixels can be completely turned off, and the power consumption is extremely low.

The “darkest hour” for the Micro LED industry in 2024. Apple prepared the Micro LED plan a few years ago, believing that this technology is the successor to OLED. It is expected that it will eventually promote Micro LED to all products, from Apple Watch to iPhone to Mac. As early as 2018, Apple thought it would be possible to equip the Apple Watch with a Micro LED screen in 2020, but this schedule was eventually postponed to 2024 or even longer. Meanwhile, in 2024, Apple stopped internal efforts to adopt Micro LED technology, supplier AMS-OSRAM lost Micro LED related contracts and was forced to begin layoffs, and the entire industry entered a “darkest hour.” The reason why Apple abandoned its efforts is that the manufacture of Micro LEDs requires large-scale production and faces many problems such as difficulties in mass production, the difficulty of transferring technology in large quantities, high costs, and industrial chain support.

The “rebirth” and future prospects of the Micro LED industry in 2025. As can be seen: ①, the problem of how to transfer millions or even tens of millions of micron-level LED chips from the growth substrate to the driving backplane in 2025 is gradually being solved. For example, Q-Pixel released Q-Transfer technology to achieve a transfer yield of over 99.9995%. ②. In September 2025, Garmin launched the world's first Micro LED smartwatch Fenix 8 Pro, indicating that Micro LED technology already has commercialization capabilities in smartwatches. ③. As an optical interconnection light source, Micro LED has low power consumption, higher data transmission density, and better temperature stability. Credo plans to promote mass production of related technologies in the short term. The Microsoft research team launched the MOSAIC optical interconnection scheme, which uses hundreds of low-speed parallel micro LED channels to replace a small number of high-speed channels for data transmission.

Risk warning: Costs remain high due to the difficulty of mass production of micro LEDs. Downstream customers do not use micro LED technology solutions, causing the industry to develop less than expected, and the development of optical interconnected light source technology has slowed down or been directly abandoned, etc.