LGD and Samsung Electronics resumed W OLED panel supply negotiations

In order to provide more choices for end users, major brand manufacturers are pursuing the diversification and differentiation of product matrix. Early last year, Samsung Electronics continued to negotiate with LGD to increase its TV lineup, hoping to purchase W OLED panels from LGD to increase its TV lineup.

However, on July 27 last year, LGD chief financial Officer Kim Seong-hyun said that the negotiations between LGD and Samsung Electronics on the supply of OLED panels for TVS have been suspended. However, as LGD's performance deteriorated last year, LGD and Samsung Electronics have resumed supply negotiations for W OLED panels in order to turn the company's performance into a profit in the second half of the year.

According to Korean media, Samsung Electronics and LG Display are discussing orders for W OLED panels worth around 200,000 to 300,000 yuan. If Samsung Electronics purchases W OLED from LGD in the second half of this year, it is expected that the company will launch TVS with LG W OLED panels as early as early next year.

In addition, the industry assessment that the resumption of W OLED panel supply negotiations between Samsung and LGD should be related to the recent changes in the display market. Samsung Display, the SDC division of Samsung Electronics Group, completely quit the LCD panel manufacturing business at the end of last year. 

LGD also stopped the operation of its domestic LCD TV panel production line at the end of last year and cut the production capacity of its G8.5 generation LCD panel factory in Guangzhou, China by half. Therefore, Samsung Electronics needs to supplement its OLED product lineup in the TV market to make up for its LCD TV business.

According to Korean media, Samsung Electronics, the largest player in the global TV market, will ship about 40 million TVS annually, of which LCD TVS will account for 100 percent in 2021 and 99 percent in 2022. In the TV market, even if Samsung Electronics achieves its goal of shipping more than 1.2 million OLED TVS of Samsung Display quantum dot (QD) -OLED this year, the proportion of LCD products will still be around 97 percent.

Therefore, it is impossible for Samsung Electronics to completely abandon the LCD business, and it is expected that the disappearance of LCD panel production capacity in Korea will increase Samsung Electronics' dependence on Chinese panel companies.

If Samsung gets W-OLED from LG Display, it will be able to diversify its premium or mid-range TV lineup. In addition, it can also cultivate the ability to negotiate with panel enterprises in Greater China. This is because the other side (Chinese companies) also know that Samsung Electronics has diversified its options.