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Continued Drop in LCD Prices and Increase in Capex for OLEDs Troubles Korean Panel Makers
October 30, 2017
 
Both Samsung Display and LG Display, are growing concerned as LCD panel prices are falling and the huge burden of adding OLED capacity to offset the LCD down cycle is expected thru the second quarter of next year with the Chinese rivals chasing them closely. WitsView said LCD panel prices for TVs, monitors and laptops in the second half of this month fell 2.7%, 0.5%, and 0.6%, respectively. In particular, the display industry is already worried about sluggish 3Q earnings as the LCD industry has entered the down cycle. LG Display has been hit hard as 90% of its sales come from LCDs. The supply by Chinese display makers seems to have contributed to the negative impact on the company's earnings. China's BOE is aiming at mass production of 65-inch and above-size TV panels after its investment in 10.5th-generation and China is expected to catch up with Korean LCD production capacity this year. WitsView predicted that South Korea's LCD panel production for 2017 would decline to 28.8% from 34.1% last year. In contrast, China's supply is expected to grow to 35.7% from 30.1% a year ago, and will dominate the market. Taiwan's Innolux and AUO are also increasing their production capacity. As a result, Taiwan's LCD production capacity is expected to rise slightly to 29.8% from 28.9%, surpassing Korea to gain second place. An industry official said, "China is overtaking Korea by selling low-quality LCDs, and it is seeking to change its customer base by importing LCDs from Taiwan." After all, domestic companies have to be competitive in OLED sector. However, LG Display's OLED accounts for only around 10%, but LG Display plans to invest 15 trillion won by 2020 to boost its OLED production capacity. It is also planning the establishment of a new OLED plant in Guangzhou, China. Samsung Display increased its OLED display panel’s production even as LG and 4 Chinese panel makers have entered the market.  Samsung Display's share of OLED sales rose to more than 60% of its total display revenue in the second quarter.