OLED Competition
Analysis says that China is investing heavily to follow its organic light emitting diode (OLED) industry to catch up with Korea but analysts say that it will be not so easy for Chinese companies to overtake Korean companies.
According to market researcher IHS Markit on December 3, the world’s capacity to produce RGB (red, green and blue) OLEDs mainly used for smartphone displays, is expected to grow 260% over the next five years from 8.85 million square meters this year to 31.89 million square meters in 2022.
The market share of Korean companies such as Samsung Electronics and LG Electronics is expected to sink from 91% this year to 63% in 2022. Samsung Display's market share is projected to fall from 87% this year to 52% in 2022.
Korean companies' market share is expected to shrink because Chinese companies are investing heavily in OLEDs. BOE, the largest display panel maker of China, started the operation of its first 6G OLED plant, B7, in the second half of this year. The company plans to additionally build B11 and B12 Plants. Three 6th generation flexible OLED plants have a production capacity of 30,000 to 45,000 sheets per month (in terms of the input of original plates). BOE is planning to build another 6G flexible OLED plant after B12.
China Star is currently building its G6 OLED plant, T4. The company is considering the construction of an additional sixth-generation OLED plant.
IHS Markit predicts that in the AMOLED market, the share of Chinese companies will increase from 7% this year to 35% in 2022 as a result of this expansion. In terms of production capacity, BOE, Tianma and China Star are projected to account for 15%, 6% and 5%, respectively in 2022.
“Chinese panel manufacturers need rich know-how to ensure a high yield, stability and reliability despite their efforts to expand OLEDs," IHS Markets explained. “In particular, Samsung Display has the power to defend Chinese companies in terms of production capacities, technological power and technological sense. The Korean display giant will steadily dominate the OLED market." Another advantage of Samsung Display is that the company is able to optimize efficiency, achieving an economy of scale through a large-scale integrated factory located in Asan, Korea.
By contrast, Chinese OLED makers' OLED factories have factories distributed across China to respond to Chinese smartphone makers. This strategy may be advantageous for supplying panels to Chinese smartphone makers such as Huawei, Xiaomi, Oppo, and Vivo, but it is difficult for them to meet the needs of large customers such as Samsung Electronics and Apple in time.