Korean display companies are expected to lay out large-scale investment plans during the first half of this year to respond to the rapidly growing organic light emitting diode (OLED) TV market.
LG Display is likely to invest in a 10.5th-generation plant to cope with the expansion of the ultra-high and ultra-large OLED TV market. Samsung Display is expected to invest in large OLED panels on a full scale.
Display industry sources said on March 3 that LG Display is expected to start investment in a 10.5th-generation plant for production of 65-inch panels during the first quarter of this year at the earliest.
LG Display already announced that it would build a 10.5th-generation OLED production line at its P10 Plant in Paju, Gyeonggi Province. "We expected LG Display to begin placing equipment orders in the second half of the year. But the company is expected to advance its investment schedule," said a researcher at a securities firm. “I understand that LG Display is already placing orders for equipment for 10.5th-generation lines even though it was not publicly disclosed.” LG Display recently decided not to pay dividends, the first time in five years. Industry watchers say that the decision was made to raise funds for large-scale investment.
Samsung Display is expected to decide on investment in large OLED panels next month by holding an investment review committee. Although Samsung Display is currently the No. 1 player in small and medium-sized OLED panels for smartphones, it is mainly making LCD panels in the large panel segment. Display industry watchers expect that Samsung Display will start work from April to set up a production line for quantum dot-OLED (QD-OLED) panels at its LCD plant in Asan, South Chungcheong Province. In addition, Samsung is expected to resume the construction of A5 Plant. The company announced in July 2017 that it would invest one trillion won to build a new plant. Samsung SDI is expected to invest at least 25 trillion won to 30 trillion won for three years from 2019.
Display companies are ramping up investment in large OLED panels as the OLED TV market is growing rapidly. Sales of OLED TVs grew 58 percent year on year to US$6.53 billion in 2018, market researcher HIS said. The number of OLED TV manufacturers also increased significantly. OLED TVs were first launched by LG Electronics in 2013 and are currently manufactured by 15 companies including Sony, Toshiba, Panasonic and Philips. Demand for super-large ultra-high-priced OLED TVs is on the rise. In 2018, sales of OLED TVs of 50 inches to 59 inches totaled 162,700 units, up 54 percent from the previous year, while those of 60- to 69-inch models reached 862,000 units, up 63 percent.
In terms of sales volume, 50- to 59-inch models eclipsed 60- to 69-inch products, but in growth rates, the latter outperformed the former. Sales of the latter are expected to accelerate in the future. In 2020, 60- to 69-inch OLED TVs are forecast to sell 3,260,100 units and 50- to 59-inch OLED TVs, 2,762,500 units, so 60- to 69-inch OLED TVs will begin to outclass 50- to 59-inch OLED TVs in sale figures. It is forecast that in 2022, sales of 60- to 69-inch and 50- to 59-inch OLED TVs will reach 6,088,900 and 3,217,800 units, respectively. In terms of sales revenue, the size of the 60- to 69-inch OLED TV market is estimated to reach US7.6 billion in 2022, more than triple the size of the 50- to 59-inch OLED TV market.
LG Display is moving to invest in the 10.5th-generation line earlier than expected in order to cope with the rapid growth of the super-large luxury OLED TV market. If the company produces panels for 65-inch TVs at its existing 8.5th-generation plants in Guangzhou, China, and Paju, Gyeonggi Province in Korea, it will suffer a drop in efficiency. While an 8.5th-generation line manufacture three 65-inch panels, a 10.5th-generation line can roll out eight.
In addition, a recent decline in OLED panel prices seems to have affected LG Display’s decision. The price of a 65-inch OLED panel dropped from US$1,103 in the first quarter of 2017 to US$950 in the fourth quarter of 2018 and is expected to fall to US$903 in the fourth quarter of 2019.