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Samsung Visual at the Brink of Adopting of OLED TVs
Last week, we discussed how multiple price reductions on Samsung’s 2021 TV lineup were failing to grow sales in the US. Samsung Visual Division’s global revenue in 2020 was ~$28B and the profit contribution was ~ $3.6B, so a lot is at stake for the company. With LCD supply quickly shifting from Korea to China, Samsung Visual’s strategy of using LCDs with QDs in the mid-term and MicroLEDs in the long term is under pressure as the Chinese TV competitors control the panel supply chain and Micro LED TV panels cost is too high for the consumer market. Sony is in a similar position. Samsung Visual is now contemplating an alternative TV strategy that would include OLEDs, a technology they denigrated, even as Samsung Display was the largest and most innovative supplier of the technology. The situation, where two long term competitors might cooperate is so tantalizing that just about every day, there is another story that the companies will or won’t execute a deal.
--"Samsung Electronics is seriously considering purchasing LG Display-manufactured OLED panels for use in its second-tier TV brands.” The Elec
The number of TV OLED panels that Samsung Electronics could procure is up to 4 million," one senior industry executive said by telephone. If the deal materializes, it would be the first time Samsung has bought OLED panels from LG. TVs with LG Display's OLED panels rate consistently amongst the best in terms of professional reviews and LGD is in the envious position of selling every panel they can make, with little pressure on prices.
If LG were to supply OLED TV panels to Samsung Visual, it would be positive for both SDC and LGD, because LG would get the revenue for further investment and relief from constant criticisms of OLED technology, while SDC would receive a gift wrapped answer, demonstrating to management that the market for OLED TVs supports further investment. SDC has used just 1/3rd of the $12B set aside for its OLED TV adventure and the phase 2 plan has been delayed.
The next table portrays Samsung Visual’s dependance on the Chine panel makers. In 2020, 63.5% of their supply came for China and in 2023, when it is highly likely that SDC will shutter their large are LCD fabs, the percentage could rise to 75% and make them vulnerable to a political decision to withhold supply.
Last week, we discussed how multiple price reductions on Samsung’s 2021 TV lineup were failing to grow sales in the US. Samsung Visual Division’s global revenue in 2020 was ~$28B and the profit contribution was ~ $3.6B, so a lot is at stake for the company. With LCD supply quickly shifting from Korea to China, Samsung Visual’s strategy of using LCDs with QDs in the mid-term and MicroLEDs in the long term is under pressure as the Chinese TV competitors control the panel supply chain and Micro LED TV panels cost is too high for the consumer market. Sony is in a similar position. Samsung Visual is now contemplating an alternative TV strategy that would include OLEDs, a technology they denigrated, even as Samsung Display was the largest and most innovative supplier of the technology. The situation, where two long term competitors might cooperate is so tantalizing that just about every day, there is another story that the companies will or won’t execute a deal.
--"Samsung Electronics is seriously considering purchasing LG Display-manufactured OLED panels for use in its second-tier TV brands.” The Elec
The number of TV OLED panels that Samsung Electronics could procure is up to 4 million," one senior industry executive said by telephone. If the deal materializes, it would be the first time Samsung has bought OLED panels from LG. TVs with LG Display's OLED panels rate consistently amongst the best in terms of professional reviews and LGD is in the envious position of selling every panel they can make, with little pressure on prices.
- Regarding the possibility, a Samsung Electronics official said nothing has been decided at this moment.
- LG Display is supplying OLED TV panels to 18 TV brands including Sony, Vizio, Xiaomi, LG Electronics, and other Chinese brands. LG Display announced a 30K substrate/month expansion of its OLED production lines at its Gen 8.5 fab in Guangzhou.
- LG Display is expected to ship 8 million large OLEDs this year up from 4.5m.
- Samsung has been the global No. 1 TV brand for 15 consecutive years. LG is the second-largest player in the global TV market, but was displaced in Q420 by TCL, which has plans to start OLED manufacturing of IJP OLED displays by 2024.
- Samsung's Display bringing its 30K substrate/month Gen 8.5 QD-OLED fab into production so it can demonstrate QD-OLED TV panels, which will be available in Q3/Q4 ’21. But the company is holding on a decision for Phase 2, adding another 30K capacity and a switch to nano rods.
- OLEDs are the premium segment in the TV market, and the rise in LCD TV panel prices has narrowed the price gap between OLED and LCD TVs, allowing LG to consider small price increases.
- Samsung Electronics and LG Display officials have been meeting for months to discuss the possible supply of OLED panels, though Samsung denied the report. The key stumbling block appears to be how each company will promote the deal and whether Samsung’s historic critical comments will be walked back.
- Some industry views are that Samsung could reach an OLED agreement with LG given it has not secured its next-generation panel yet. Samsung said it could not comment on when it would begin production on its QD-OLEDs.
If LG were to supply OLED TV panels to Samsung Visual, it would be positive for both SDC and LGD, because LG would get the revenue for further investment and relief from constant criticisms of OLED technology, while SDC would receive a gift wrapped answer, demonstrating to management that the market for OLED TVs supports further investment. SDC has used just 1/3rd of the $12B set aside for its OLED TV adventure and the phase 2 plan has been delayed.
The next table portrays Samsung Visual’s dependance on the Chine panel makers. In 2020, 63.5% of their supply came for China and in 2023, when it is highly likely that SDC will shutter their large are LCD fabs, the percentage could rise to 75% and make them vulnerable to a political decision to withhold supply.
