Samsung and LG are fighting against Chinese invaders of the display market

Until recently, it seemed that the display market (whether for budget smartphones or large-format TVs) was entirely dominated by South Korean manufacturers. Its dominant sales position was supported by an even more impressive technological advantage over its competitors. However, all this seems to have come to an end, and now Chinese manufacturers are dictating their terms. Korean corporations, which not so long ago fought with each other for global leadership, now have to urgently join forces in the face of a common threat.

Last week, Samsung and LG signed a strategic agreement under which LG will supply WOLED displays for Samsung TVs. The negotiations were long and difficult. Nevertheless, the parties agreed to supply 700–800 thousand displays in the next five years.

Samsung has its own division that develops displays, Samsung Display. It is one of the leaders in the global market both in technological development and in terms of sales volume. Moreover, the company is actively working on the development of a direct competitor to WOLED matrices from LG – QD-LED technology. Nevertheless, the two companies have been increasingly cooperating in recent years and have turned from direct competitors into strategic partners. And all because they have a common enemy in the display market, the growth of whose power can no longer be ignored. This is China.

Back in 2021, Samsung closed its last LCD display plant in China. LG, according to Financial Times (FT), is now trying to do the same. And the reason for this is the competition lost to Chinese manufacturers in the LCD market. If in 2018, according to the newspaper, Chinese manufacturers accounted for 30% of sales of liquid crystal displays, then in 2023 this figure had already reached 60%. Korean manufacturers now account for only every tenth LCD sold in the world.

Although Chinese manufacturers cannot boast the same level of technology as the Korean giants, they do have generous government subsidies and a huge domestic market.

And this is enough to sell not so advanced LCD displays at much lower prices than Korean competitors.

“Just as Korea overtook Japan in the display market, China is likely to outsmart us with its huge domestic market, abundant capital and technological development,” the newspaper quoted Park Jong-hoon, head of research at Standard Chartered in Seoul, as saying.

Samsung and LG, having lost the fight in the LCD market, decided to focus on LED technologies for expensive equipment – TVs, smartphones, tablets. The problem, however, is that, FT notes, Chinese manufacturers are not resting on their laurels and are rapidly increasing their presence in the OLED display market. Chinese state-owned BOE Technology is building a $9 billion plant in Chengdu to produce advanced OLED panels. And this production will use the most advanced technologies that exist on the market.

“China is suffering huge losses, but it is still supplying OLED panels at low prices to increase market share. This means that it will destroy competitors, as it did in the LCD display market,” says UBI research analyst Yi Chung-Hung. “China will also overtake Korea in the OLED market if everything remains as it is.”

And the figures confirm analysts’ predictions that are gloomy for South Korean manufacturers. Just five years ago, Chinese companies did not have even 10% of the OLED display market. By the end of 2023, they already control a quarter of the world market. Manufacturers from China simply have no other competitors.

Kirill Sarkhanyants