LGD Raises OLED TV Panel Prices
October 01, 2018
LG Displayincreased the average price of their OLED TV panels by 2.4% in 2Q, while the average price of LCD TV panels declined by 16.2% and the average price of a 55” LCD panel declined by 13.1%. Since LG Display can sell everything they produced there was little interest in stimulating additional demand through price reductions and focused on generating profitability during a period of difficulty for both the company and its parent and primary customer. In Q318, when buyers must fill quotas for sets to be offered during the year-end and Chinese New Year holidays, and despite 3Q average LCD panel price declines of 3.3% and 8.8% for 55” TV panels, LGD is expected to again increase panel ASPs.
LG Display has been producing OLED TV panels since 2012 on a commercial basis and Chinese competitors are in the midst of large OLED TV panel capacity expansion projects. When finished, those plans will allow Samsung, BOE andChinaStarto produce OLED TV panels, potentially at costs equal to or lower than LGDs depending on total capacity, yield and costs for each supplier. By 2022 LG Display will still have a unit volume share of just under 67%, with BOE at 10% ChinaStar at 8% and Samsung at 15%. These estimates are unit based; they take into consideration the ramp times of each new fab and the supplier’s experience with high-volume OLED TV panel production. Both BOE and CSoT are building Gen 10.5 fabs, which will share the production of both ultra-large LCD and OLED displays.
TV brands that wish to expand their OLED TV offerings will be sensitive to quality issues that tend to plague OLED panel producers during the early stages of high volume production, and both the service and reputation cost to brands will put into question whether a discounted OLED TV panel is worth the potential cost if problems occur. With LGD’s years of experience, LCD will have pricing power through 2020, with 2021 and beyond determined by the quality and volumes of Samsung, BOE and ChinaStar. It is therefore easy to understand why LG Display raised prices in 2Q and 3Q, and has the ability to continue to do so for at least another 24+ months.