Samsung, LG forge OLED alliance again

Recently, Korean media reported that Samsung and LGD in large size OLED panel production capacity cooperation has reached an agreement, the two sides will restart the South Korean "OLED panel alliance", LGD is expected to supply large size W-OLED panel to Samsung Electronics in this quarter at the earliest.

The order is a big boost for LG, which posted a loss of 10.739 billion won last year and borrowed 1 trillion won from LG Electronics to keep its business afloat.

For LGD, shipments of 2m large-size OLED panels are worth at least $1.5bn, or about 20-30% of its total large-size OLED panel manufacturing capacity. This order is not only beneficial for LGD's high-generation OLED panel factories to increase the operating rate, but also to boost the market sales of large-size OLED products.

"LG Display's productivity will improve and will likely reach full capacity next year, helping it lay the foundation for a return to profitability," said Jeff Kim, an analyst at KB Securities.

Lg aims to supply two million W OLED panels to Samsung Electronics next year and increase shipments to three to five million in the following years. The 77-inch and 83-inch W OLED panels are likely to be the first to be supplied to Samsung.

The deal gives Samsung a chance to overtake Sony as the world's second-largest supplier of OLED TVS. According to market research firm Omdia, Samsung currently accounts for just 6.1 percent of the OLED TV market, behind LG Electronics' 54.6 percent and Sony's 26.1 percent.

For Samsung Electronics, increasing the production capacity layout in the field of high-level OLED TV not only represents the affirmation of Samsung Group for the future market potential of OLED TV products, but also represents that Samsung is advancing into the field of full-size OLED, hoping to become the absolute leader of the OLED industry.

Notably, Samsung, the world's largest TV maker, has been slower to adopt OLED TVS than its rival LG Electronics in terms of product layouts, as it has argued that OLED panels are more expensive and better suited to small and medium-sized products such as smartphones and tablets. But as OLED is making its way to the full-size space, led by consumer electronics giants like Apple, Samsung Display is also starting to make relevant layouts.

Samsung Electronics has been negotiating with LGD since the beginning of last year to purchase W OLED panels to increase its sales lineup of TV products, but the two companies didn't reach an agreement until recently because of a minor incident.

In negotiations with LGD last year, Samsung sought to lower prices for W OLED panels than other TV makers, including LG Electronics and SONY. Accordingly, on July 27 last year, LG Chief Financial Officer Kim Sung-hyun announced that LG and Samsung Electronics had stopped negotiating to supply OLED panels for TVS.