Runner and Chaser
The Korean semiconductor and display industries show different reactions to an attack of “Chiwan,” a new coined word of China and Taiwan. The semiconductor industry has heralded a good performance in the first half of this year with the excellent competitiveness, while the display industry is considering organic light emitting diodes (OLEDs) a solution for the decrease in liquid crystal display (LCD) prices in the second quarter due to China’s oversupply.
Samsung Electronics and SK Hynix are enjoying a semiconductor boom but they still face a challenge. China has invested 200 trillion won (US$178.89 billion) in the local semiconductor industry alone to beat Korea. A predominant view is that China cannot catch up in a short period of time because Samsung Electronics and SK Hynix have high technology and market dominance. However, there is a variable that Chiwan can shorten the time when a Chinese or Taiwanese company wins the bid for Toshiba’s memory unit to be finalized on March 29.
The domestic display industry is staggering as Chinese companies are seeking to surpass due to a not much gap in technology. There is an overriding prediction that the price of LCD panels, which skyrocketed in the second half of last year, will decline from the second quarter of this year. The price increase of LCD panels will lead to the price increase of televisions and the lower consumption, and this in turn will decrease the price of panels. There is also concerns that Sharp, which has announced to stop supplying panels to Samsung Electronics, can promote the fall of prices by oversupplying products to the market. In addition, China’s BOE and HKC and Taiwan’s Innolux will start producing an 8th-generation LCD panels from the second quarter, which is highly likely to lower LCD prices due to the increase in supply.
The domestic display industry is responding with Chiwan’s aggressive movement by raising the speed of OLED advancement. Samsung Display will stop the operation of the L6, which a production facility of LCDs, and convert the L7-17 to an OLED production line by the end of this year, focusing on small and mid-size OLEDs. LG Display has come up with a differentiated OLED reinforcement strategy.