Contract Value to Exceed 5 Tril. Won

Samsung Electronics will reportedly sign a contract with LG Display to procure two to three million OLED TV panels annually from next year to 2024.

Samsung Electronics is set to accelerate its penetration of the global OLED TV market using OLED panels from LG Display.

Samsung Electronics will reportedly sign a contract with LG Display to procure two to three million OLED panels annually from next year to 2024. The average price of a 55-inch general-purpose OLED panel stood at US$510 in the first quarter of 2021, Omdia said in May. This suggests that the contract value would exceed 5 trillion won.

Samsung Electronics has not released an OLED TV model until now. Yet, it is poised to enter the OLED TV market in earnest. It has decided to procure OLED TV panels from LG Display, which is a rival of Samsung Display, as it cannot wait until its sister company completes the development of QD OLED panels. While some industry watchers predict that Samsung Display will start volume production of QD OLED panels within 2021, it needs a considerable amount of time to stabilize yields in the early stage of production. Samsung Display is not expected to ship more than one million units next year.

Analysts say that it is unusual for Samsung Electronics to use OLED panels from LG Display, which is competing with its subsidiary Samsung Display. Earlier in 2017, Samsung Electronics procured LCD TV panels from LG Display when Japan's Sharp stopped supplying panels. Although Samsung Electronics and LG Display had discussed business cooperation several times in the past, they failed to make a deal for various reasons, including security concerns.

Samsung Electronics has decided to make inroads into the OLED TV market as LCD panel prices soared recently, undermining the profitability of its LCD TV business. Omdia said that the average price of a 55-inch general-purpose LCD panel hit US$200 in the first quarter of 2021. It jumped 73.9 percent on year. This is in contrast to an 8.1 percent drop in OLED panel prices during the same period.

LG Display expects Samsung’s entry in the OLED TV market to expand the OLED panel market. As of early 2021, 19 manufacturers produced OLED TVs around the world, including Korea, the United States, Japan, China and Europe. LG Display is the only company that supplies large OLED panels to these TV makers. Display market experts estimate that LG Display will ship 7.9 million large OLED panels in 2021. This is a significant rise from 4.5 million units in 2020. Its OLED panel shipments will swell to 11.7 million units next year.

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution