Samsung Display and LG Display, the two major Korean display makers, have begun the second round of their battle in the display market. Unlike LG Display, which makes large-sized panels, Samsung Display makes smash hits focused on small and medium-sized panels. LG Display is trying to reverse its fortunes by jettison its loss-making LCD business and focusing on the OLED display market. Samsung Display and LG Display had taken different paths in the display market but this time, they are facing each other in the OLED display market.
China is closing in on Korea in the global OLED panel market, but it has its own weaknesses. These weaknesses include budget model lineups, a relatively low technology level, and possible investment delays. Experts say Korean display makers need to exploit these weaknesses and further widen their gaps with Chinese display makers.
China dominated the global LCD market through a price war. The country has rapidly penetrated the OLED panel market in recent years. This is due to the growing adoption of OLED panels in various IT devices such as smartphones, laptops, and tablet PCs.
According to the Korea Display Industry Association’s key statistics on the display industry, in 2018 the OLED market share in Korea and China was 95.9 percent and 3.2 percent, respectively, a gap of more than 90 percentage points. However, as of the first half of last year, the gap was 73.8 percent and 25.6 percent, respectively, narrowing to 50 percentage points.
The OLED production capacity gap is also shrinking between Korea and China. In a report released last year, market research firm TrendForce found that Korea’s and China’s OLED production capacity shares were 54.9 percent and 43.7 percent, respectively. Considering that only five years ago China’s capacity share was less than 10 percent it is easy to know how quickly China ramped up its capacity.
However, China has some weaknesses that these statistics cannot tell. First of all, China’s product lineup is concentrated in the low- to mid-priced segments, including rigid OLEDs. Flexible OLED panels are more profitable than rigid OLED panels, but their technological limitations make Chinese companies’ position low in the global market.
Korean display companies are focused on supplying flexible OLED panels and other high-value-added products such as IT OLED panels for laptops and tablet PCs. Samsung Display and LG Display supplied all of the OLED panels for Apple’s new tablet PC, the iPad Pro, which proves that the two Korean display giants have more advanced technology compared to their Chinese competitors such as BOE.
“Korea’s OLED display technology is at quite a high level, so it is not something that China can easily copy,” said Lee Dong-wook, senior vice chairman of the Korea Display Industry Association.
Some analysts believe that Chinese OLED display makers are slowing down their investments. According to Chinese media Zaker, BOE recently invited equipment companies from China’s rival countries -- South Korea and Japan -- to the groundbreaking ceremony for its 8th-generation OLED panel production line. This is unusual, considering that the groundbreaking ceremony is usually held after equipment suppliers are selected. Industry observers speculated that BOE has yet to select a depositor and is in no rush to invest in 8th-generation OLED technology.
According to Chinese media outlet China Times, BOE Chairman Chen recently said in an earnings report that the company’s OLED business “shipped nearly 80 million units last year but still suffered a huge loss.”
Korean industry insiders say that Korean companies need to further widen their technology gaps with their Chinese competitors by investing in facilities, increasing R&D capabilities, and securing key talent. The Korean government’s support is also needed. Chinese display companies have dominated the global LCD market with full support from the Chinese government. If Korea wants to avoid repeating the same mistake they made in the LCD market, the Korean government needs to be more proactive in providing budgetary and tax support to Korean display makers in the OLED market.
“All players in display ecosystems including the Korean display industry, academia, and the Korean government, should work together organically,” said Choi Joo-sun, president of Samsung Display, who recently took over as the head of the Korea Display Industry Association. “With the government’s active support, industry and academia should join forces to preempt next-generation technologies that will determine the success or failure of new businesses such as foldable, rollable, OLEDoS, LEDoS, and transparent displays.”