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The Rise Of Chinese Companies, The Loss Of Korean LCD Companies

Blaze Display Technology Co., Ltd. | Updated: Jul 11, 2018

Beijing LCD display is Korea's eighth largest export commodity, the main market is China. However, after the mass production of domestically produced products in China, the related exports of South Korea's two major manufacturers, Samsung and LG, fell sharply, and LG continued to experience marketing losses in the second quarter of this year.

LCD, also known as liquid crystal display, is generally used for televisions, computer monitors, and mobile phone panels, and is therefore also referred to simply as a panel. South Korea's Samsung and LG have been the main suppliers to the Chinese market for many years because of their early start and excellent quality.

However, with China's active investment in the localization of LCD products, South Korea's related exports began to decline in 2018, and the situation of China-South Korea competition has emerged. According to estimates by Korean financial institutions, the sales of LG display in the second quarter of this year was 33.668 billion yuan, with a loss of 1.04 billion yuan. This is the second consecutive quarterly loss. Samsung's situation is relatively better, with sales of about 40 billion yuan and profit of about 400 million yuan, but profits fell 22% year-on-year.

For reasons of sales and profits falling, or even losses, the South Korean side believes that it is mainly due to the rise of Chinese companies such as BOE.

According to a recent report by the UK market research firm IHS, the sales price of the 65-inch LCD display was 393 US dollars in March last year, and fell to 248 US dollars in May this year after 14 months, a drop of 36%. The main reason for this decline was the mass production of China's BOE, especially their Hebei plant launched the 10.5th generation facility in the first quarter of this year. Since then, the price has fallen below $300, showing a cliff-like decline.

It is understood that South Korea's Samsung and LG are still using the 8.5-generation facilities, BOE uses 10.5 generations of new facilities for mass production, one panel can be cut into eight 65-inch displays, while South Korea's 8.5 generation can only be produced at one time. 3 sheets. Therefore, in terms of price competition, BOE can also lower the price by 20% on the current basis, and still have a profit margin of 10 US dollars, while LG and Samsung are at a loss.

Therefore, experts here in Seoul believe that the competition between the two countries in terms of display screens, at least on the LCD side, there is almost no possibility of a turnaround. Park Yong-zan, a professor at Yongin University, said: "With BOE pushing the price down to your life, our Korean companies cannot follow up. In this case, we will not be able to win the Chinese business by LCD competition."

Professor Park believes that BOE's achievements in LCD can be attributed to the purchase of Korean modern display (modern TFT-LCD) and the efforts of modern technology personnel. On the other hand, the strong support of the Chinese government is another driving force for the development of BOE.

In terms of display screens, South Korea’s previous idea was that China would expand its higher-end OLEDs during the follow-up of LCDs. This is a new technology panel that does not require a backlight and has a faster response. Samsung is due to the fact that OLEDs account for more LCDs than LCDs, so there is still operating profit in the second quarter, and LG is investing in Guangzhou, China. The OLED factory was postponed due to the approval of the Chinese government and incurred losses.

Experts' opinion is that although Korea's industrial concept is solid, it is unexpected that the strength of China's R&D and the speed of follow-up are beyond the expectations of the ROK. Professor Park Shengzan said: "LG and Samsung noticed this problem at the time. They thought that there should be a period of time in the follow-up, but China is too fast, much faster than expected."

After Apple's iPhone iphone X adopts OLED panels, other brands are following up, and the competition for LCDs is turning to OLED panels. This is a positive trend for the relatively advanced Korean technology. However, the recent news that Apple is considering purchasing BOE OLEDs is very anxious for the Korean side.


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