Korean panel makers are likely to suffer even more losses in the second quarter due to the impact of the outbreak on major markets such as Europe and North America. So, can the outbreak accelerate the reshaping of the panel industry? Samsung Electronics recently reported a $240 million loss in its display business, according tomedia reports. In addition, Samsung has recently been exposed to frequent layoffs and early closure of LCD production lines.
Author: Qi Zhiying
This reflects the helplessness of Korean panels, which are similar to Samsung’s display, which is the South Korean panel giant. And behind this is the domestic panel manufacturers continue to expand panel shipments, increasing the market share of Chinese panels.
Industry insiders said that because of the outbreak in Europe, North America and other major markets, Korean panel manufacturers in the second quarter is likely to suffer more losses. So, can the outbreak accelerate the remodeling of the panel industry? Where is the future growth space between Korean panel manufacturers and domestic panel manufacturers?
Samsung shows performance under pressure to accelerate exit from LCD track
Samsung Electronics reported first-quarter 2020 results showing sales of 6.59 trillion won ($5.36 billion) and an operating loss of 0.29 trillion won ($240 million), mainly due to falling mobile display sales,media reported.
Senior industrial and economic observer Liang Zhenpeng believes that the current panel market oversupply, resulting in a reduction in panel prices, the performance of Samsung has had an impact, “on the one hand, the current LCD TV market demand is declining, the whole machine enterprises on the LCD panel procurement volume is shrinking, resulting in the entire LCD panel market oversupply; “
As we all know, Samsung Display Company, the world’s leading LCD panel manufacturer, is a leader in smartphone displays. Samsung showed near monopoly in the global AMOLED smartphone panel sector in 2019, with 390 million shipments and a market share of 85.2%, according to the 2019 Global Smartphone Panel Market Survey by CINNO Research, a third-party data agency. Samsung Display also makes display panels for electric display displays, personal computers, smartwatches, TVs, and more.
Lately, however, Samsung has been reporting frequent news of layoffs and production lines. Back in September, it was reported that Samsung Display had launched an early retirement plan to cut staff. In addition, the company has transferred employees from some LCD production lines to OLED production lines.
In March, Samsung reported that it was accelerating the shutdown of LCD production and switching to OLED due to the outbreak, according to a report by CINNO Research. It is reported that the shutdown plan or will be advanced to the fourth quarter, involving three large LCD panel factories in South Korea, as well as the previous news of the closure of the Suzhou 8.5 generation line.
Media said Samsung’s exit from the LCD panel market is not a surprise, mainly because Samsung’s business has continued to lose money in recent quarters, after a significant increase in rival capacity, Samsung in this area is facing challenges, in the four quarters in 2019 losses in this area.
Korean TV market space squeezed, Samsung, LG in the OLED field of head-on battle
The Korean panel maker, which is facing losses, is not a Samsung shower. LG Display, also a Korean panel giant, lost 362 billion won (about 2,083 million yuan) in the first quarter of 2020, according tomedia reports, marking the panel maker’s fifth consecutive quarterof operating loss. In addition, LG Display’s net loss in the first quarter was 199 billion won (about Rmb1,145m), more than double the year-on-year.
Notably, several analysts said Samsung Display and LG Display, two panel makers, were likely to suffer more losses in the second quarter because of the apparent impact of the outbreak on major markets such as Europe and North America.
LG is also in the same situation as Samsung, which is moving away from THE LCD field to the OLED field. At the end of January, LG Display announced that it would stop production of its TV LCD panels in South Korea, and that its plant in Pozhou, in the north, would close this year. At that time, some media analysis said that LG’s move is because of China’s panel companies to increase production, South Korea LCD panel market deterioration, it is difficult to improve the profit and loss situation.
It is understood that LG Display Guangzhou plant has been officially put into operation in August 2019, the introduction of the 8.5th generation of OLED production line, used to expand the production capacity of OLED panels. According to previous lying lg Display, the 8.5-generation OLED line will be mass-produced by March this year. However, due to the outbreak, the production line production time will be postponed until the second quarter of this year.
As can be seen, Korean panel manufacturers will be completely shut down LCD panel production line, equipment, plant and resources, such as the full shift to OLED panel production.
In this regard, Liang Zhenpeng believes that the future trend of display technology is OLED technology, Samsung and LG in this area each has advantages. “Now the world can produce large-screen OLED display panelonly only South Korea LG, and Samsung is currently focusing on the small screen OLED panel market layout, both companies in their respective fields have formed a certain monopoly advantage.” “
Industry insiders believe that the current Korean panel giant Samsung Display and LGD ushered in a head-on confrontation in the field of OLED, will be in the field of a fight.
Epidemic catalytic industrial chain reconstruction of domestic manufacturers to win the opportunity, OLED field still has challenges
Behind the early withdrawal of Korean panel giants from the LCD field, domestic panel manufacturers led by Beijing Oriental, Huaxing Optoelectronics and HKC are expanding panel shipments, increasing the market share of Chinese panels.
South Korea accounted for 41.1% of the global panel market last year, showing a downward trend for three consecutive years, and is likely to fall to 30% this year, according to the Korea Show Industry Association.
In contrast to South Korea’s panel industry, china’s global share of panels is rising rapidly. China’s small and medium-sized LCD market accounted for 40.4 per cent, well ahead of South Korea (13.3 per cent), Japan (28.7 per cent) and Taiwan (14.4 per cent). In the field of large-size LCD panels, China accounted for 34.3 percent, surpassing South Korea’s 33.8 percent and ranking first in the world.
TCL Technology Chairman Li Dongsheng said in an interview with the media, the outbreak has accelerated the restructuring of the global industrial chain, the future of China and South Korea will become the semiconductor display competition of the two main bodies.
In February 2020, mainland Chinese panel manufacturers accounted for 59.4% of total shipments, or nearly 60%, according to CINNO Research. Huaxing Optoelectronics overtook BOE as the world’s largest supplier of LCD TV panels with a market share of 18.8%. BOE and Samsung came in second and fifth.
However, the withdrawal of Korean panel manufacturers from the LCD field does not mean that their position in the display panel market will decline, Chinese enterprises in the large-size LCD industry will gain a dominant advantage, but in the field of flexible OLED display technology and Korean enterprises still have a gap.
South Korea has an overwhelming advantage in OLED, accounting for 89.9 per cent of the market last year, surpassing china’s 9.3 per cent, according to the Korea Display Industry Association. In the small and medium-sized OLED panel market, South Korea accounted for 88.7% of shipments.
At the same time, Liang Zhenpeng said: “Although BOE, Huaxing Optoelectronics and other domestic panel manufacturers can produce a small number of OLED display panels, but the degree of technical stability, production technology, good product rate, OLED technology patents and Korean enterprises still have a large gap.” “