How Long Will Korea’s Lead in OLED Be Maintained?

Korean companies have already lost the top position in the world LCD industry to their Chinese rivals. Chinese state-run display maker BOE ranked first in the world by shipping 12.5 million LCD panels in the first quarter of this year. Last year, BOE took up 21% of the global market, outclassing LG Display with a 20% market share.

Experts in the LCD industry regards China's overtaking Korea as an inevitable consequence of the Chinese government's full support for Chinese LCD manufacturers.

"BOE's operating profit ratio was close to 10% in the first quarter of this year, which could not be attained by selling LCD panels only," said an official of the display industry. "That means the Chinese government paid subsidies that much."

Since 2010, Samsung Display and LG Display have focused on developing small- and medium-sized OLEDs and large-size OLEDs, respectively, but China has invested in 10th-generation LCDs due to a lack of OLED technology.

Chinese makers such as BOE and Foxconn are expected to widen their gap with Korean companies by running 10th-generation LCD plants beginning this year. As a result, LCD panels 65 inches or larger are expected to go through a glut.

Samsung Display and LG Display started their transition to OLEDs several years ago as they judged that they would not be able to maintain competitiveness in the LCD industry.

Samsung SDI produced OLEDs for the first time in the world in 2007. In 2013, it rolled out the world’s first flexible OLEDs. In 2012, Samsung Mobile Display merged with the LCD Division of Samsung Electronics and massively invested in OLEDs.

Since last year, the market of OLEDs loaded into the Galaxy series has been growing explosively as Apple used them in the iPhone X. According to market researcher IHS, the small and medium-sized OLED market has grown at an average annual rate of 23.5% over the past five years and is expected to exceed 31 trillion won this year. Last year, 69% of Samsung Display's sales came from OLEDs.

LG Display recently reviewed a plan to produce OLEDs from the 10.5th-generation P10 Line in Paju, Gyeonggi Province which was scheduled to produce LCDs first. The P10 is the world's largest single plant whose site equal 14 football fields combined (102,123 square meters). A total of 10 trillion won will be invested in the plant.

Korea’s display makers are worried that China's big push for the display industry will undermine not only the Korean LCD industry but also their OLED business. China is expected to begin to invest in facilities to produce 130,000 sheets of small- and mid-sized OLED panels this year. Currently, Korea is believed to be about five years ahead of China in the OLED panel technology race.

"If Korean display companies had switched to the OLED sector far earlier, the current situation would be better,” a display industry official said. "Korean display companies should remain vigilant because China will make sizeable investment into OLEDs."