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Korean OLED Equipment Supply to China Raises Concerns about Tech Leakage
Beyond Control
Korean OLED Equipment Supply to China Raises Concerns about Tech Leakage
  • By Cho Jin-young
  • July 28, 2015, 02:30
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With Korean OLED equipment suppliers entering Chinese and Taiwanese markets, Chinese panel makers like BOE Technology and EverDisplay Optronics are securing OLED tech using Korean small and mid-sized companies.

Some in the industry are raising concerns about the leakage of technology for OLED panels by Korean companies like Samsung Display and LG Display. From the perspective of local equipment suppliers with few growth engines in the local market, it is hard to resist the temptation of having large customers in China, the largest market.

According to media outlets in China and Taiwan on July 27, BOE's subsidiary Xinihua is expected to sign a contract with Korean OLED equipment suppliers like STI and Wonik IPS during the latter half of this year. Industry analysts are saying that in the process of supplying equipment, the outflow of local manufacturing technology for OLED panels is highly likely.

The reason for numerous Chinese display makers, including BOE Technology, to especially target Korean OLED equipment suppliers lies in the fact that the latter have developed tech by closely working with Samsung Display and LG Display. An industry source said, "In earlier years, Chinese companies tried to build partnerships with Japanese firms. But they are now looking for Korean suppliers with a lot of experience in mass-producing OLED equipment." The source added, "If local companies supply OLED manufacturing equipment, the transfer of manufacturing technology is highly likely."

Both BOE Technology and EverDisplay Optronics are also preparing to produce OLED screens for mobile devices by purchasing a large amount of equipment from Korean-based Technology Engine of Science (TES) this year. Taiwanese smartphone maker HTC is planning to release a new model called "HTC E9st" with an OLED display supplied by EverDisplay Optronics within this year.

Industry analysts think that Chinese display manufacturers like Tianma and Visionox will have a system to mass-produce OLED panels as early as this year. They have been planning to invest in OLED displays from last year, starting with EverDisplay Optronics. So far, Samsung Display has produced more than 90 percent of OLED screens for mobile devices worldwide, and LG Display has manufactured most large OLED panels.

Not only large display makers but also newcomers in China are aiming to enter the OLED market as well. A source familiar with the matter remarked, "In China, even government loans are limited to next-gen industries like OLED displays," adding, "With cash injections, Chinese companies are likely to flood the market with their products."

Meanwhile, Chinese firms are expected to begin the full-scale production of OLED panels this year, representing 2 percent of the market in 2015, according to an annual report on OLED displays released last Feb. by market research firm UBI Research. Chinese OLED panel makers are predicted to comprise 40 percent of the market by 2020. In contrast, Korean companies are projected to lose their grip on the market, and their combined market share is likely to fall to around 48 percent as a result.