Putting Profits before Foolish Pride
Samsung Electronics' new CEO and vice chairman Han Jong-hee has been an opponent of organic light emitting diode (OLED) TVs since he was a manager of the Video Display Business Department, which produces TVs. “OLED TVs have many technical problems, such as screen burn-in,” Han told whenever he met reporters. “We will not engage in the OLED TV business.”
However, Samsung Electronics is currently in talks with LG Display on OLED panels supply. As the two companies are known to be close to reaching an agreement regarding the order volume and delivery time, Samsung Electronics is expected to be able to launch OLED TVs next year.
Recently, Han, a staunch critic of OLED TVs, was promoted to CEO of Samsung Electronics, drawing attention to why the company has made the decision to produce OLED TVs. Industry insiders say that Samsung Electronics is putting profits before foolish pride.
Samsung Electronics has been the world’s No. 1 player in terms of TV sales volume for more than 15 years. Yet, the global TV giant faces many concerns. First, Samsung TVs are all LCD TVs, including luxury models. The problem is that Samsung Display, a key supplier of display panels for Samsung Electronics, will stop rolling out LCD panels next year. In this case, Samsung Electronics will have no choice but to use LCD panels from Chinese companies that dominate the LCD panel market. If Chinese LCD panel makers raise LCD panel prices, it will directly hit Samsung Electronics’ TV business. In this situation, OLED panels that Chinese companies do not produce can be used as Samsung Electronics’ hidden card in negotiating LCD panel prices with Chinese companies. This is because if Chinese companies raise LCD panel prices at will, Samsung Electronics can respond to them by saying that it will ramp up production of OLED TVs.
Samsung Electronics’ next-generation TV business plan is still up in the air, which forces the company to use OLED panels from LG Display. Samsung Display started mass production of QD-OLED panels in November. However, sources say that Samsung Display cannot mass-produce QD-OLED panels immediately because the yield is still low, and the production cost is very high. Accordingly, Samsung Electronics needs to use OLED panels from LG Display until Samsung Display's QD-OLED production is on the right track. The OLED TV group led by LG Electronics is solidifying its position in the premium TV market as OLED TV sales double every year. The more time it takes for Samsung Electronics to finalize its next-generation TV business plan, the more difficulty it will face in making a breakthrough.