Accounts for 40% of Global Display Market
China accounted for 40 percent of the global display market in terms of sales in the first quarter of this year, rising to the top by beating South Korea by a margin of seven percentage points. In 2019, South Korea was 11 percentage points ahead of China. Last year and this year, however, the global display demand surged with regard to COVID-19, LCD panel prices soared as a result, and Chinese companies boosted their share in the market they are dominating.
China’s global LCD panel market share for this year is estimated at 60.7 percent. In addition, its share in the smartphone OLED panel market is likely to rise from 15 percent to 27 percent this year and next year. In this market, Samsung Display’s current share is 80 percent and the share is forecast to fall to 60 percent or so next year.
According to market research firm DSCC, BOE, the largest display panel manufacturer in China, posted US$7.7 billion in sales and US$1.4 billion in operating profit in the first quarter to exceed the sales and profits of Samsung Display and LG Display for the first time ever.
Chinese companies in the industry benefit from their huge domestic market and substantial government subsidies. The subsidies given to BOE for 10 years from 2010 exceed two trillion won and those given to the top four for eight years from 2012 are more than 5.5 trillion won, which is more than 25 percent of Samsung Display’s and LG Display’s net profit for that period.
The Chinese government has provided a wide variety of infrastructure and tax incentives as well. For example, land, buildings, water and electricity are free of charge for Chinese display manufacturers and their corporate tax rate is 13 percent instead of 25 percent. In addition, zero tariffs are applied to the equipment and materials they import from abroad. As a result, Chinese display manufacturers’ production cost is just 71 percent of that of South Korean display manufacturers, which has never enjoyed such a generous government support.