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South Korea’s LG Display will start supplying high-end TV panels to Samsung Electronic from as early as this quarter, three sources said, in a deal that would help the loss-making flat-screen maker turn profitable.
LG Display aims to supply 2 million units next year and boost shipments to 3 million and 5 million units in subsequent years, two sources with direct knowledge of the matter said. Initial supplies to Samsung would likely be 77-inch and 83-inch white OLED (WOLED) TV panels.
For Samsung, the deal highlights how it is looking to expand in high-end organic light emitting diode (OLED) TVs as competition heats up in the lower end with Chinese vendors. OLED panels cost nearly five times more than liquid-crystal display (LCD) panels.
With this deal, Samsung could overtake Sony as the second largest supplier of OLED TVs globally.
Analysts have speculated that LG Display was in talks to supply OLED TV panels to a new client. Reuters is first to report details of the deal with Samsung Electronics.
All the sources declined to be named because the deal is not public.
Both LG Display and Samsung Electronics declined to comment.
Samsung Electronics, the world’s biggest TV manufacturer, has been slower than its hometown rival LG Electronics Inc in embracing OLED TVs, arguing the technology is more suited to small devices such as smartphones and tablets, partly due to the high cost of panels.
For LG Display, shipments of 2 million OLED panels will be a major boost, worth at least $1.5 billion (roughly Rs. 12,300 crore) and amounting to around 20 percent to 30 percent of its total manufacturing capacity for large-size OLED panels, taking it to full capacity, according to analysts.
The company has been running its OLED factory below full capacity due to a limited customer base and as a pandemic-driven demand surge for new TVs has tapered off amid soaring inflation and slowing economy.
LG Display supplies OLED TV panels to LG Electronics and Sony. It also supplies smartphone displays to Apple Inc.
Samsung Electronics has its own display-making unit Samsung Display which focuses on OLED screens for mobile phones made by Apple and Samsung.
In OLED TVs Samsung currently has a 6.1 percent market share, behind LG Electronics with 54.6 percent and Sony 26.1 percent, according to market research firm Omdia.
The market is expected to grow nearly 6 percent to $11.7 billion (roughly Rs. 96,100 crore) this year and to $12.9 billion (roughly Rs. 1,06,000 crore) by 2027, according to Omdia.
© Thomson Reuters 2023
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