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Panel expert downbeat on Korean investments in premium TV displays

This photo shows a gamer with LG Electronics' gaming OLED TVs that use OLED panels by LG Display. (LG Electronics)
This photo shows a gamer with LG Electronics' gaming OLED TVs that use OLED panels by LG Display. (LG Electronics)
Further investments on the part of South Korean display panel manufacturers in large OLED panels for televisions, monitors and laptops will be unlikely for the rest of 2022, according to a panel expert on Thursday.

Yi Choong-hoon, chief executive officer of display panel research firm UBI Research, cited a slow path to profitability in the cutting-edge panel businesses by Samsung Display and LG Display, despite growing market demand, in a seminar at Coex in Seoul on Thursday.

For Samsung, a 13 trillion-won ($10 billion) spending pledge to advance and commercialize its next-generation quantum dot organic light-emitting diode displays in 2019 by Samsung de facto leader Lee Jae-yong is also shrouded in uncertainties, unless Samsung is willing to bear costs incurred by long-term losses.

“Under Vice Chairman Lee Jae-yong’s leadership, unlike his predecessor Lee Kun-hee, Samsung will refrain from investing in new business if it takes more than three years to turn a profit,” Yi said. “Recently, Samsung’s QLED panels grew profitable five years after the commencement.”

In the meantime, Yi projected LG Display to turn into the red this year in a turnaround from 2021’s profit, amid slowing shipments of OLED panels for LG Display since the second quarter of 2022. Moreover, LG will be largely cash-strapped due to its decision to transform its liquid crystal display line in Paju, Gyeonggi Province, into an OLED panel line.

These trends, coupled with its paused supply deal with Samsung Electronics’ TV making arm, will put LG Display in a quandary over its investment in OLED displays for expansion, according to Yi.

Samsung and LG’s respective display panel arms have boasted a competitive edge in the premium large panel business, based on the technology using self-emissive diodes. Samsung branded its premium panels as quantum dot-OLED, among others, whereas LG advertised theirs as white-OLED.

LG Display supplies its white-OLED panels to some 20 TV brands, while Samsung Display supplies its quantum dot-OLED panels to two TV brands, including Sony.

These products are confronting a number of challenges, Yi noted.

They are slowly being contested by Chinese rivals such as BOE and TCL, amid gamers’ appetite for high-quality performance and resolution for gaming gear that is replacing the preceding LCD technology. For example, BOE during Display Week 2022 in May unveiled plans to mass produce panels for OLED TVs in five different sizes, including 95 inches.

Moreover, Apple is scheduled to launch its iPad using OLED panels beginning 2024.

A talent shortage here is another cause for concern. Yi said Korea’s policy support to shore up the domestic semiconductor industry will backfire on the display panel industry, as it is triggering a wave of display panel talent outflow into the chips industry, which tends to be more lucrative.

“In the next two or three years, Korea’s display panel will be hit hard by Korea’s focus on chip industry,” Yi said.

“(Display panel makers) cannot keep pace with the wage level (in the semiconductors industry), so engineers leave the display industry and the industry often fails to retain them.”

Revenue for Samsung Display, which focuses on small OLEDs for premium gadgets, is projected to have declined 2.3 percent on-quarter in the second quarter, while the quarterly operating profit will record a fall of 3.2 percent, according to Kim Un-o, an analyst at IBK Securities.

Meanwhile, LG Display’s operating profit will shrink by 64 percent in 2022 from the previous year, according to an analyst consensus by market intelligence FnGuide.