Samsung Electronics will produce TVs featuring liquid crystal display (LCD) panels supplied by its crosstown rival LG Display from July. This is the first time for Samsung to use LG panels. The company will use 40- and 60-inch LG panels in its premium TVs.
Accordingly, Samsung and LG, which are the biggest rivals in the TV market, have established a new cooperative relationship as set manufacturer and component supplier. Market watchers say that the two companies will maintain their partnership for the medium to long term as Japan’s Sharp decided to stop supplying panels to Samsung.
According to industry sources on June 27, LG Display will start producing the 40- and 60-inch LCD panels for Samsung’s high-end TVs from next month at its P7 and P8 plants in Paju, Gyeonggi Province. After Sharp abruptly broke its long-term partnership with Samsung in December last year, Samsung tapped LG for supplies of larger LCDs. An official from the electronics industry said, “The two firms have negotiated contract conditions, including the production schedule, over the past six months and have recently come to an agreement for the medium and long term supply system. So, LG Display will start supplying its panels to Samsung in July.”
About 700,000 to 1 million units of the LG panels are expected to be supplied to Samsung a year. Samsung, the world’s largest TV maker, used to secure 4 to5 million LCD panels a year from Sharp and has had difficulties in expanding the production of some premium products after the Japanese display maker cut off the supply.
However, Samsung will be able to get over “Sharp Shock” as the company will start getting the supply of panels from LG and increasing the supply from China’s BOE and Taiwan’s Innolux from next month. Previously, Taiwan’s Hon Hai Precision Industry, which acquired Sharp, announced to stop supplying panels to Samsung in order to hold back the world’s largest TV maker in the market. LG Display has also secured a stable source of revenues as it starts supplying panels to the world’s largest TV maker.
The electronics industry believes that the supply of LG panels to Samsung will be the start of expanding the partnership of two companies. Samsung Display, a subsidiary of Samsung Group, focuses more on organic light-emitting diode (OLED) panels rather than LCDs so it cannot supply enough LCDs to Samsung.
An official from the electronics industry said, “LG Display focuses on large LCD and large OLED panels, while Samsung Display focuses on small and mid-sized OLEd panels. So, the two companies can be a shield one another when a company is in crisis. When they set up the cooperative system in components, while avoiding risks of investment in equipment and facilities, there will be a huge synergy.”