China’s display producers, such as BOE, China Star and EverDisplay, made an 18 trillion won (US$16.79 billion) investment this year alone to build facilities with a monthly production capacity of 130,000 small and mid-size organic light emitting diodes.
Considering the fact that Samsung Display, the largest display maker in the world, has a monthly production capacity of 200,000 units, Chinese companies can become the second largest manufacturer at a breath in the next few years. On the other hand, Samsung Display and LG Display are hesitating to make an investment this year due to sluggish sales of smartphones equipped with OLED and lack of capital.
A small and mid-size OLED is a core component of smartphones. About 10 percent of smartphone production costs are spent on OLEDs. It is one of the most expensive for a single component. It was also a factor that differentiated premium smartphones from others after it was supplied to Samsung Galaxy series and the iPhone X. When China can mass produce such small and mid-size OLEDs, it can pose a serious threat to not only the South Korean display industry but also smartphone producers, including Samsung and LG. An official from the industry said, “Chinese smartphone manufacturers have used South Korean OLEDs in their high-end models. However, they will use locally produced products when accomplishing the vertical integration.”
China already outpaced South Korea in terms of supply of liquid crystal displays that account for a substantial part of sales of South Korean display producers. According to market data giant IHS Markit, China’s BOE ranked top with a 21 percent share in the 9-inch or larger display panel market for the first time last year. LG Display continuously took first place until 2016 but it slipped to second last year as its market share dropped from 23 percent in 2016 to 19 percent in 2017. Given the fact that LG Display and Samsung Display are shifting from LCD to OLED, it is not too much to say that the price of LCDs around the world is entirely in China’s hands.
China is also about to outpace South Korea’s technology. In the example at the top, BOE will start mass producing the 10.5-generation LCD in April for the first time in the world. In short, the company can produce a LCD panel with a length of 3,300mm and a width of 2,940mm. It can have five more 65-inch television panels than the 8.5-generation with a length of 2,500mm and a width of 2,200mm. In addition, Chinese companies are introducing a foldable small and mid-size OLED panel for smartphones, focusing on attracting clients.