Displays
Digitimes Research: Samsung, LG outsource TV orders to ODMs to secure panel supply
Tom Lo, DIGITIMES Research, Taipei

Korea-based vendors who have adopted a one-stop business model for their LCD TV business have recently placed some strategic orders with outside ODMs for 2015. Samsung Electronics has outsourced production to China panel maker BOE's TV manufacturing subsidiary Beijing BOE Multimedia Technology, while LG Electronics has outsourced some of its LCD TV models for the North America market to Compal Electronics.

Shipments are expected to reach at least one million units in both cases.

Through the orders, Digitimes Research believes, the Korea-based vendors are looking to secure their external panel supply sources and gain better understanding of Taiwan ODMs' manufacturing capability and pricing structure.

Samsung and LG, two major vendors in the global LCD TV market, have mainly adopted in-house produced components for their sets that they are also manufacturing in house. But LG made contacts with Taiwan's ODMs about the outsourcing orders in 2014.

Compal has already started a project handling the LG orders and products will start shipping in the second quarter with a volume of around one million units. The LCD TVs adopt panels not manufactured by LG Display (LGD), a panel making subsidiary of the LG Group.

By outsourcing its TV production to BOE, Samsung is clearly trying to secure external panel supply. Despite the fact that the LCD TV market is already saturated, Samsung is still aggressively expanding its presence in the market and aiming to sell 60 million LCD TVs in 2015, up from 50 million units in 2014.

To achieve the goal, Samsung needs to acquire a sufficient supply of panels for 2015. Since only a limited number of panel suppliers are producing 32-inch panels - the most popular LCD TV size for emerging markets - Samsung is believed to have accepted the term from BOE to outsource parts of its LCD TV manufacturing to BOE's subsidiary in exchange for a stable 32-inch panel supply.

Samsung's orders to BOE's subsidiary reportedly will reach between 1-3 million units. The final volume of BOE's LCD TV orders will depend on the supply status of the 32-inch panels in 2015.

Content from this article was part of a complete Digitimes Research Chinese-language report that has not yet been translated into English. If you are interested in an English version of the report or wish to receive more information about the report, click here to contact us and we will get back to you as soon as possible. Digitimes Research also provides quarterly tracking services for market sectors such as China Smartphone, China Smartphone AP, Taiwan ICT and Taiwan FPD. Click here for more information about Digitimes Research Tracking services.

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