LG Display Leaning Towards Supplying Its LCD Panels for TVs to Samsung Electronics

LG Display is planning to supply its LCDs for TVs to Samsung Electronics as it is leaning towards accepting requests from Samsung Electronics. When Hon Hai Group, which took over Sharp, notified Samsung Electronics regarding stoppage of supply of LCDs, Samsung Electronics has requested LG Display for its supplies. It is predicted that these two companies, which have been competing for long time, will establish a new relationship as trade partners.

According to an industry on the 11th, LG Display is leaning towards supplying its LCD panels to Samsung Electronics’ VD Business Department within a large scheme. Because size of panels, amount of supplies, and timing of supplies are still not decided, additional discussions between these two companies are still needed.

LG Display believes that securing supply of LCD panels is vital for its business as there is a lack of supplies of LCD panels recently and it has already decided on most of demanders in this year.

Pending issue regarding LG Display is its production capability as it will extra panels to deliver to Samsung Electronics when it increases its output. If it does not increase its output, it can then supply its panels to Samsung Electronics by adjusting supplies for its current customers. However if it decides to use this plan, there are chances that its customers can oppose this plan.

Although LG Display is also thinking about producing its panels from small and mid-sized IT panel lines that are somewhat small, this is not that simple as well as its IT panel customers can also oppose this plan.

In midst of these situations, LG Display is thinking about a plan that allows itself to supply its panels to Samsung Electronics as much as it can.

“Both companies have yet to decide on any plans regarding supply of LG Display’s panels.” said a representative for LG Display. “Although both companies still need to discuss about detailed information such as amount of supplies, timing, and necessary additional investments, we are looking into ways where we can deliver panels to Samsung Electronics as much as we can.”

If both companies want to agree on actual trade, there are many issues such as standards of panels, investments in modules and others that they still need to settle.

Especially LG and Samsung Electronics have been using IPS (In Place Switching) and VA (Vertical Alignment) panels respectively. Because they are using two different technologies, TV design , investments and others are needed. Industries believe that this partnership will have a greater chance of becoming long-term relationship rather than temporary relationship.

Industries are hoping that this will be an opportunity that will break a practice of them not having any cross-purchase due to a reason of being a competitor towards each other. Although South Korean Government tried to have Samsung and LG cross-purchase in the past, it did not work as it was not an issue that was necessary for actual businesses and as there were negative opinions internally. Expectations this time around are big as this is a request from an actual business department and industries believe that this will break a practice that has stayed for long time between these two companies and open up a new generation of partnership.

A market research company called WitzView is estimating that ratio of oversupply of large LCD panels during first half of 2017, which is a seasonal slow season, will be 3.2% which is similar to yearly ratio of 2016 at 3.3%. This indicates that are still many demands for panels in midst of a slow season.

Experts predict that issues regarding oversupply will be limited for a while as 10.5th generation and 11th generation plants, which are being constructed in China, are expected to start mass-producing products in second half of 2018 and 2019 respectively but still need one to two years until regular operation.

Staff Reporter Bae, Okjin | [email protected]