LG Display Less Vulnerable to Japan's Export Restrictions than Samsung Display

Samsung Display and LG Display are in starkly different situations in the face of Japan’s restrictions of parts and materials exports to Korea. LG Display can produce organic light-emitting diode (OLED) panels at its overseas plants, but Samsung Display’s overseas plants will be inevitably affected in a chain reaction if its domestic plants stop. In the case of Samsung Display, its Korean plants carry out the front-end process where Japanese parts and materials are used, while its overseas plants handle the back-end process.

LG Display will begin mass production of OLED panels for large TVs at its Guangzhou plant in China from August. The Guangzhou plant carries out the front-end process including deposition-encapsulation, while the company’s plants in Vietnam are in charge of the back-end process including lamination and assembly. LG Display is expected to be free from Japanese export restrictions because the entire production processes are done at factories in China and Vietnam. "All etching gas used in the production process of large-size OLED panels is supplied by companies in China," an LG Display official said. "We do not use etching gas from Japan, so we are not affected by Japan’s export restrictions."

LG Display's domestic plants such as those in Paju and Gumi, Korea, use etching gas from Japan, but it is possible to prevent chain-reaction damage because the production lines of its domestic and overseas factories are completely separated.

LG Display is in a relatively better situation than Samsung Display, but is bent on preventing any damage from export regulations. Industry experts say that the Guangzhou factory, which began its operation countdown, may ramp up its panel production earlier than originally planned. In addition, LG Display is considering replacing Japanese etching gas with Chinese.

Samsung Display, on the other hand, is under different circumstances. The front-end process is done in the A3 Line in Korea, with the back-end process carried out in its V3 plant in Vietnam and Tianjin plant in China. The company’s plants that make small and medium-sized OLED panels are known to use Japanese polyimide. If the Japanese government’s restrictions are prolonged, they will deal a blow to its overseas factories following its domestic ones. "Currently, there are no Samsung factories producing finished OLED panels in Korea. All panels are finally finished at overseas factories," a Samsung Display official said.

Japan has a virtual monopoly of the world polyimide market as it controls about 90 percent of the global supply. Therefore, it is difficult to replace imports from Japan with Korean products. "It may be hard to find domestic and foreign companies that can replace Japanese companies this year," an industry official said. Therefore, if it takes a long time for Samsung Display to find new suppliers or replace Japanese parts with ones made in Korea, it will have no choice but to amend its OLED supply plans for corporate customers.