Quality vs. Quantity
As Chinese LCD makers are expected to outperform Korean rival companies in 8th-generation panels from next year, Samsung Display and LG Display apparently intend to expand their facilities for OLED panels.
According to industry sources on July 9, Samsung Display started to operate its A3 line for small and medium-sized flexible OLED displays last April, planning to continue investment in its A2 line for small-to mid-sized OLED panels within the year. The decision is attributable to the belief that it will be more beneficial to reduce cost by changing existing equipment in the A2 plant so that it can be used to make flexible OLED panels, rather than making a second investment in its A3 line right away.
The A3 line, which was already invested in before, can produce up to 30,000 units a month. A source close to Samsung Display explained, “The operation of the A3 plant is still in its early stages. Since there is still enough free space, the plant will have much more production facilities in the mid-long term.”
LG Display is also cautiously preparing to enlarge its OLED production facilities. Some in the industry recently said that the company will invest up to 900 billion won (US$796 million) to build a factory for small and mid-sized OLED panels in Gumi, North Gyeongsang Province. However, a spokesperson for LG Display said, “We are considering making an investment, but we haven't decided yet.”
The reason for the two companies' focus on investing in OLED production facilities lies in the fact that while Chinese LCD makers are contributing to oversupply in the market, there is a sluggish demand for TVs, PCs, and mobile devices.
Market research firm IHS iSuppli recently predicted that Chinese LCD manufacturers would beat Korean competitors in 8th-generation panels next year. Chinese companies are expected to produce 1.2 times as many 8th-generation OLED panels as Korean firms in 2016. China's 8th-generation OLED display production capacity is currently 86 percent that of Korea.
As for OLED panels, the possibility of losing market dominance to Chinese LCD makers for a short period of time is widely acknowledged to be minimal due to the gap between Korea and China in technology. Even though the dependence of LCD manufacturers on part assembly is relatively high, OLED panels are not easy to make, since it is necessary to vapor-deposit organic or non-organic material on a glass or plastic substrate. Therefore, it is difficult for latecomers to get a yield rate of 98 percent with OLED panels.
The OLED panel market, which was estimated at US$8.23168 billion in 2014, will grow from US$11 billion in 2015 to US$12.63481 in 2016, surpassing US$20 billion in 2020, according to market research firm DisplaySearch.