Samsung, LG Likely to Enter Market-moving OLED Supply Deal

SEOUL, May 17 (Korea Bizwire) — Samsung Electronics Co. and LG Display Co. reportedly sealed an organic light-emitting diode (OLED) display deal, rekindling years of speculation over a partnership that is sure to bring in major changes to the TV industry.

LG Display will start supplying OLED TV panels to Samsung Electronics as early as the second quarter, Reuters reported Tuesday, with the goal of shipping 2 million units next year and up to 5 million units over the next few years.

Initial supplies would be 77-inch and 83-inch panels, the report said.

Two million units is worth around US$1.5 billion and takes up approximately 20 percent of LG Display’s annual OLED panel production at full capacity.

Both Samsung and LG declined to comment on the report Wednesday.

The deal, if true, is expected to give a much-needed boost to LG Display, which has been suffering losses for four quarters in a row, as sluggish demand for smartphones, TVs and computers continued to stymie its panel business.

“The deal will lay a groundwork for LG Display to make a turnaround, as it is highly likely that LG will have to run its manufacturing facilities at full capacity next year (to meet a rise in demand),” Kim Dong-won, an analyst from KB Securities, said.

LG Display is currently supplying high-end OLED TV panels to LG Electronics and Sony, the world’s two largest OLED TV makers, The company also supplies smartphone panels to Apple.

Samsung is a relative newcomer in the global OLED TV market, which launched its first OLED TV only last year in two sizes — 55 and 65 inches.

Samsung’s market share is 6.1 percent, trailing far behind the dominant leader, LG Electronics, and Sony at 54.5 percent and 26.1 percent, respectively, according to market research firm Omdia.

A potential partnership between the two firms — the world’s largest TV maker and a dominant OLED panel supplier — has been the subject of intense speculation for years.

Questions about a possible deal have been frequently raised during earnings calls and other media events.

Asked about such a potential deal during the conference call on April 26, LG Display said, “We are open to every possibility.”

While declining to directly mention customers, the panel maker said, “We will actively cooperate with any customer who acknowledges the value of OLED panels and could work with us to create synergies.”

For its part, securing a stable supply of OLED panels is crucial for Samsung ahead of the annual shopping season, including Black Friday, later this year, Lee Choong-hoon, head of the Seoul-based display market research firm UBI Research, said at the 2023 OLED Korea Conference last month.

“I think a deal will happen,” he said at that time.

Under such a deal, global OLED panel shipments are estimated to grow 3.8 percent on-year to reach 10 million units next year, KB Securities analyst Kim said, adding OLED TVs are expected to take up 4.7 percent of the global TV market in 2024, up from 3.4 percent in 2022.

The global OLED TV market is forecast to grow 6 percent on-year to $11.7 billion this year and to $12.9 billion by 2027.

“While OLED TVs are undeniably the mainstream product today, only LG Electronics truly believed in its potential more than 10 years ago,” Jung Jae-cheol, senior vice president and leader of Home Entertainment R&D Lab, said during a media event in March to announce a new lineup of OLED TVs for this year.

“Now, 21 TV brands are producing OLED TVs” to grab a slice of the growing high-end TV segment, he said, adding “This demonstrates that consumers have acknowledged the value of OLED TVs and LG made the right decision.”

LG Display rose 3.75 percent to close at 15,770 won on the Seoul bourse Wednesday, far outperforming the wider market’s 0.58 gain, on positive business outlooks.

(Yonhap)