The Korean display industry desperately needs technological breakthroughs to break out of the current difficult situation, Lee Dong-hoon, president of Samsung Display and chairman of the Korea Display Industry Association (KDIA) said at the 10th Display Day held at JW Marriott Hotel in Seoul on Oct. 7.
“Let’s develop innovative technologies that have never existed before to open up a new future for the Korean display industry,” Lee said.
The business environment for the display industry is getting worse. LG Display is expected to post nearly 1 trillion won (US$836.75 million) in operating loss this year due to an oversupply, which is fueled by Chinese suppliers of low-priced liquid crystal display (LCD) panels.
Korean display manufacturers are also facing difficulties acquiring core materials as Japan began to curb exports of hydrogen fluoride in July.
Lee said, “Chinese companies are more aggressive than before in investing in production facilities, though demand for display panels is on the decrease owing to the slowdown of the smartphone and TV markets. They are threatening us with an increased supply.”
He added, “The global trade environment is getting worse with the diversification of trade disputes between countries and market uncertainties are growing because of Japan’s export restrictions. We are heavily burdened with problems and issues.”
A CEO of a smaller firm also said, “Small and mid-size companies are also struggling with a lower demand for displays from the global economic recession.”
South Korean companies are expected to deal with the global oversupply from the second half of this year. LG Display presented its drastic restructuring plans on Oct. 4 to cut the number of executives above the team leader level by 25 percent by incorporating overlapping departments and simplifying the organizational structure. This came less than a month after former vice chair and CEO Han Sang-beom who led the company for the last eight years stepped down over mounting losses last month. Under the leadership of new CEO Jeong Ho-young, the downsizing strategy is forecast to be accelerated further. Some expect that LG Display will dismiss more than 5,000 employees and executives, which is one sixth of the total, through its voluntary retirement program.
Given the current circumstances, LG Display is seeking to bounce back by investing in organic light emitting diodes (OLEDs), mainly large OLED panels for televisions. The company is the largest OLED panel provider in the world. The OLED business has barriers to entry as it requires high levels of technology and it is difficult to manage yields. Therefore, it will be able to maintain the gap with China in the next few years.
In addition, Samsung Display will announce on Oct. 10 its plans to invest 13.20 trillion won (US$11.06 billion) to build manufacturing lines for QD-OLED displays in its Tangjeong plant in South Chungcheong Province. The company has over 90 percent market share in small and medium-sized OLED panels that are used in smartphones. However, it needs a new source of profit due to negative growth in the smartphone market and China’s aggressive investment in the OLED sector.
In particular, LG Display and Samsung Display are accelerating the localization of high-purity hydrogen fluoride that they are heavily relying on Japan to lower risks from external variables. An official from a display company said, “The chicken game in the LCD market is becoming more intensifying because of the strategy of Chinese firms backed with the Chinese government’s subsidies. It is crucial to improve the profitability in new industries based on the price competitiveness secured through the economy of scale in OLEDs.”