Samsung Display and LG Display have either exited or are exiting LCD manufacturing, yielding the market to China-based competitors. It remains uncertain whether the South Korea-based display giants can maintain their technological lead in the four remaining areas of OLED for IT and automobile, transparent OLED, and Microdisplay.
In recent years, Chinese manufacturers have overtaken South Korea-based competitors through a low-price-high-volume strategy in LCD manufacturing while accelerating their foray into OLED and expediting the acquisition of South Korean technology and talents to narrow the technological gap, which China-based manufacturers are confident to achieve by scaling up their investments.
On the other hand, South Korea-based suppliers are slowing down or reducing the scale of their investments amid the macroeconomic headwinds.
According to Sigmaintell, BOE surpassed Samsung Display in smartphone panel shipments, which may include LCD and OLED panels, in the first half of 2023. UBI Research forecasted that smartphone OLED display shipments by China-based suppliers will surpass South Korea-based counterparts by 2025. It is expected that South Korea- and China-based suppliers are expected to account for 57.6% and 42.4% of the smartphone OLED display shipments in 2023, respectively. The ratios are anticipated to be 53% and 47% in 2024, reaching 45.2% and 54.8% for South Korean and Chinese suppliers, respectively.
It's not easy for South Korea-based suppliers to maintain their technological edge when China-based competitors are intensifying their efforts to acquire South Korean OLED talents and technology to replicate their success in the LCD market in the OLED sector. Meanwhile, bolstered by government subsidies, China-based suppliers are eyeing the mid-to-low-end market with an aggressive price strategy.
BOE adopted a low-price strategy, securing its position as the OLED supplier for Apple's iPhone 14. Even though it does not hold a technological edge over Samsung Display and LG Display, there are expectations that BOE will supply displays for the iPhone 15 series by the end of 2023.
South Korean suppliers eager to stay relevant
Samsung Display, the leader in small and medium-sized OLEDs, is rapidly expanding its focus on IT OLED displays, starting with the supply of OLED displays for Apple's iPad to cement its lead in 8.6-gen OLEDs. The company reportedly planned to invest KRW4.1 trillion (US$3.1 billion) in its Asan facility in South Chungcheong, with plans to mass-produce OLED for tablets and notebooks by 2026. Samsung Display is also expanding its partnerships with global car brands like Ferrari, BMW, and Audi.
LG Dipsly currently leads in large-sized OLED displays and has a significant gap with Chinese competitors. Amid expectations about slowing demand for TVs, the company is expanding into the IT and automotive OLED display markets. It is also accelerating the development of technologies related to extended reality (XR), such as OLED on Silicon (OLEDoS) and LED on Silicon (LEDoS). LG Display is partnering with Mercedes-Benz for automotive OLEDs.
Experts also suggested that South Korea-based suppliers further accelerate the commercialization of next-generation displays, such as Micro LED, where Samsung introduced an ultra-large-sized Micro LED TV, and LG Display unveiled stretchable displays based on Micro LED technology.
According to a South Korean Display Industry Association report, in-organic LEDs, including Micro LED and quantum dots (QD), which offer advantages like longer lifespan and higher brightness, are expected to see explosive demands by 2030. The sales of in-organic displays are expected to reach US$9.3 billion, accounting for 6.5% of the overall display market, and reach US$79.98 billion, 40.5% of the market, by 2045.
Chinese and South Korean competitors engaged in patent warfare
Amid Chinese competitors' eagerness to catch up by snatching crucial talents and technologies from their South Korean counterparts, suspicions of patent theft cases are also rising.
Samsung Display mentioned in a recent earnings call that cases of intellectual property theft and infringement are increasing to an extent that cannot be ignored, implying the potential involvement of a few Chinese companies.
Samsung and BOE are currently entangled in patent infringement lawsuits in both the US and China, marking an ongoing legal battle that may lead to a reduced reliance of Samsung on BOE. Notably, recent reports have suggested that Samsung is contemplating a decrease in its procurement of mobile OLED displays from BOE. Furthermore, it is exploring the possibility of altering its orders for TV LCD panels, potentially broadening its supplier base and enhancing cooperation with LG Display.
Source: UBI Research, October 2023
Article translated by Jingyue Hsiao
