[비즈한국] As China leverages its dominance in the liquid crystal display (LCD) market to push into organic light-emitting diodes (OLED), the domestic display industry is facing a new challenge. While a significant technological gap remains, China's aggressive, government-backed push for low-cost panels has effectively kicked off a heated pursuit. Samsung Display and LG Display034220 are seeking breakthroughs by expanding the application range of OLED. However, their detailed strategies differ. Samsung was the first in the industry to invest in 8.6-generation production facilities, targeting emerging IT sectors such as tablets and laptops. LG is also targeting IT products and automotive displays but has not joined the multi-trillion won investment race, judging that reckless spending could hold the company back if demand for IT panels falls short of expectations.
Samsung: Betting on IT OLED as a 'Future Growth Engine'
The IT OLED panel business, which is drawing industry attention, carries inherent uncertainties. Due to the nature of the industry, proactive responses via large-scale investments are necessary, yet it is difficult to predict the timing of demand expansion or growth potential before committing to such massive capital expenditures. Finished products like tablets, laptops, and PCs are particularly trend-sensitive and have relatively longer lifespans than mobile devices, making them a true challenge. While prevailing observations suggest rapid growth following Apple's entry, the market is unstable enough to be easily shaken by recent sluggish sales of new iPad products.
Because visions for IT OLED and short- to mid-term outlooks vary, industry response strategies have also diverged. Samsung Display and LG Display are pursuing different paths.
Samsung, which has maintained a monopolistic position in smartphone OLED through swift past business pivots, has expressed its determination to take the lead in the small-to-mid-sized OLED market by aggressively expanding its IT OLED investments. It has set a target of producing 475.6 million small-to-mid-sized OLED panels next year and plans to build an 8.6-generation IT OLED production line by investing 4.1 trillion won by 2026. This scale allows for the production of 10 million laptop OLEDs annually. In line with this structural improvement, the company replaced its CEO at the end of last year, appointing a display expert to the role for the first time in four years, moving away from a semiconductor expert. New Samsung Display CEO Choi Joo-sun has served as team leader for OLED panel development, head of the development office for the Small and Medium Display Division, and head of the Small and Medium Business Division since his time in the Samsung Electronics005930 LCD business unit.
The display industry periodically undergoes large-scale investment cycles. While facility investment negatively impacts cash flow in the short term, it secures production capacity, leading to corporate growth through mass orders if executed at the right time. An 8th-generation glass substrate is approximately 2.2 times larger than the existing 6th-generation ones primarily used for smartphones. Larger source substrates lead to increased panel output, higher price competitiveness, and better profitability. It is widely considered that existing 6th-generation facilities will be at a disadvantage in future panel unit price competition and market leadership. This is why, following Samsung, Chinese firms like BOE (12 trillion won) and Visionox (10.3 trillion won) are also investing in 8.6-generation processes, which are considered the turning point for mass-producing next-generation OLEDs.
LG: 'Speed Control' Prevails Regarding Production Capacity Investment
LG Display, which is struggling in the large-sized OLED market due to a slowdown in the TV market, is also focusing its portfolio on the IT sector. The company sold its TV-use LCD plant in Guangzhou, China, for 2 trillion won and is increasing the proportion of high-value-added OLED revenue. Industry insiders believe it is highly likely that LG Display will concentrate the proceeds on OLED to enhance business competitiveness and repay borrowings to improve its financial structure. The company also conducted a promotion-focused reshuffle centered on talent who contributed to OLED achievements. Choi Hyun-chul, head of the Strategic Customer (SC) business division in the small-to-mid-sized OLED segment, was promoted to Executive Vice President.
Beyond smartphones, the adoption of small-to-mid-sized OLEDs in tablets, gaming, and high-end laptops is increasing, and expectations for IT OLED are growing as Apple is known to be applying OLED panels to MacBooks starting next year. Apple's new iPad, released last May, featured OLED for the first time in history. According to market researcher DSCC, the market share between Samsung and LG stands at 4:6. LG Display saw its first-half revenue this year increase by approximately 1.4 trillion won compared to the previous year, driven by the 'iPad effect.' However, sales were lower than expected due to high prices, leading to a 38% and 23% decline in panel revenue for the two companies in the third quarter, respectively. The consensus is that OLED penetration will accelerate due to the expansion of on-device AI. OLED is ideal for on-device AI, which handles high-calculation tasks in wireless environments, due to its low power consumption.
However, the company is holding off on investments to expand 8th-generation OLED production capacity. The reasons are complex, involving concerns about financial soundness and a judgment that current 6th-generation facilities can handle demand in an uncertain market. Since switching to a deficit in the second quarter of 2022, LG Display has recorded over 2 trillion won in losses in both 2022 and 2023. With an expected deficit of about 500 billion won this year, recovery is slow. The company lacks the investment funds to build production lines, and raising capital is also difficult.
The question remains when and how much the IT OLED market will expand. Some suggest that the timeline for a turning point toward IT OLED will be delayed as the release of the MacBook Pro, initially expected for the first half of next year, has been postponed.
An industry official stated, "Although LG Display has not yet made an investment decision, it is true that they are currently ahead of competitors in terms of having already started mass production this year through preemptive investments in the 6th generation," adding, "Because demand forecasting is difficult, we might even see cases where companies that have announced investment plans delay them."
Park Jae-geun, President of the Korean Society of Semiconductor & Display Technology (Professor at Hanyang University), noted, "The market for laptops and tablets hasn't fully opened up yet. It's difficult to define future competitive situations based solely on investment scale." He added, "LG Display is focusing on internal management, such as selling its Chinese LCD plant and reorganizing its internal structure, while Samsung, which is operating its small-sized OLED lines at full capacity, is investing appropriately to pioneer new markets in the medium-sized segment."