LG's 88-inch 8K Z9 OLED TV on display during the Appliance & Electronics World Expo 2019 (AWE 2019) in Shanghai. Photo: AFP

Facing fierce competition from Chinese rivals with lower production costs, South Korean display makers are pushing forward a shift to the production of high-resolution organic light-emitting diode (OLED) panels.

South Korea was the world’s largest display-producing country until 2017. However, China took the number one spot in 2018, gaining a global LCD market share of more than 30%, leaving Korean makers with a share of 29.5%. Chinese panel makers benefit from low production costs and a narrowing technological gap with their Korean rivals, allowing them to mass-produce lower-priced LCD panels.

Consequently, LCD prices fell significantly, leading to an operating loss for Korean display makers. LG Display posted an operating loss of 617 billion won in the first half of this year. Samsung Display posted more than 700 billion won operating profit in the second quarter due to one-off income, but it recorded a 560 billion won operating loss in the first quarter.

The Korean display industry was forced to shift its business to higher-end OLED panels, where it still has a competitive edge.

“Chinese panel makers are focused on LCD production, and lag behind [their] Korean rivals in the OLED sector,” an industry insider told Asia Times. “In making large-size OLED above nine inches, Korea is 3-5 years ahead of its Chinese rivals. In a smaller size OLED, less than nine inches, the technological gap narrowed to about one year. ”

He added, “Korean firms try to increase the use of OLED and creat more OLED demand … Korean makers can regain the dominant position in the global display market.”

According to industry experts, should OLED prevail in the display market, Chinese panel makers may be in trouble as they have yet to start producing large OLED panels.

LG Display increases investment

LG Display has increased investment in its  OLED production facilities since 2011 and has accelerated it in recent years.

LG Display announced in July its plan to invest 3 trillion won (US$2.53 billion) in 10.5th-generation OLED production facilities in Paju, about 50 km north of Seoul, following a 1.84 trillion won investment in 2015 and 2.8 trillion won in 2017.

Currently, LG’s plant produces OLED with 8th-generation facilities, which were optimized for 55-inch OLED panels. They can produce larger OLED panels than 55 inches with the current facilities but productivity drops when manufacturing larger OLEDs.

On the other hand, 10.5th-generation facilities are the best fit for a 65-inch OLED panel. Their productivity thus improves when producing OLEDs larger than 55 inches.

LG said it planned to start mass-producing 30,000 units of 65 inches or larger OLED panels per month in the first half of 2022 at the new facilities. It is planning to mass-produce an additional 15,000 panels per month starting in the first half of 2023.

“If LG Display secures a production base for 10.5th generation OLEDs, LG Display will likely enhance its competitive edge in ultra-large TV markets,” said LG in a press release. “Not only will it strengthen its competitive edge in current TV markets, but it will also contribute to creating new markets by producing different types of products such as wallpaper and rollable OLED applications. ”

Including this investment, LG has poured 15 trillion won into the production of large OLED since 2011, including five trillion won in its Chinese plant in Guangzhou, which started large OLED production a month ago.

It has also invested 10 trillion won in small OLED production since 2015.

LG is restructuring, including a voluntary retirement scheme, to cut costs. It has reduced the number of executives by one third and appointed a new CEO.

Samsung invests 13.1 trillion won

Samsung Display, a unit of Samsung Electronics, announced last week that it would invest 13.1 trillion won over the next five years to upgrade its display manufacturing line.

South Korean President Moon Jae-in attended the signing ceremony for the investment plan in the Korean city of Asan. Samsung plans to use one of its LCD production lines in Asan for high-resolution “quantum dot” display panels.

Samsung Display currently produces small OLED panels for mobile phones and large LCD and provides them in conjunction with Samsung Electronics.

Samsung Electronics uses a high-resolution display called QLED (quantum dot light-emitting diodes), a different kind of high-performance display panel from LG’s OLED, for its TV products. Samsung Electronics added quantum dot technology to LCD panels manufactured by Samsung Display. Some argue that it is a type of LCD as, like other LCD panels, it uses backlight, which emits light, and quantum dot technology is used only to refine color expression made by the backlight.

Quantum dots are tiny semiconductor particles a few nanometers in size, illuminated by UV lights.

On the other hand, OLED is a light-emitting diode (LED) in which the emissive electroluminescent layer or a film emits light in response to an electric current.

Samsung said it would start production of “quantum dot” display from 2021 with a monthly capacity of 30,000 panels.

An industry source said to Asia Times, “New high-resolution display panel produced by Samsung at the new production line will be self-illuminating OLED with quantum dot technology, which is different from QLED currently used for Samsung’s high-end TVs.”

OLED demand expected to rise

LG predicts that OLED will become more popular. “Currently, a total of 15 global TV manufacturers are selling OLED TV, and an increasing number of companies are joining the group of OLED TV production.”

TV makers using OLED panels include Japan’s Sony, Toshiba, Panasonic, and Europe’s Philips, Grundig, and Bang & Olufsen.

According to LG, with the growing number of global TV manufacturers selling large OLED TV, OLED demand, which stood at 200,000 panels in 2013, surpassed 2.9 million units in 2018. The demand is expected to reach 3.8 million units by the end of 2019.

Market research firm IHS Markit forecast that sales of OLED will increase to 7.7 million units in 2021 and 10 million units in 2022. IHS also predicts that sales of OLED TVs in the global market will account for 10.4% in 2023, up from 5.7% last year.

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