Samsung, LG to invest ￦65T to overtake China in display race

Korea’s two largest panel makers — Samsung Display and LG Display — will make a combined 65 trillion won ($49 billion) of investment by 2027 into advanced display technologies in a bid to secure technical supremacy over Chinese manufacturers.

President Yoon Suk Yeol, fourth from left, poses with Samsung Electronics Executive Chairman Lee Jae-yong, fifth from left, while on a visit to Samsung Display's panel-making factory in Asan, South Chungcheong, on April 4. [YONHAP]

Korea’s two largest panel makers — Samsung Display and LG Display — will make a combined 65 trillion won ($49 billion) of investment by 2027 into advanced display technologies in a bid to secure technical supremacy over price-cutting Chinese manufacturers.

The Ministry of Trade, Industry and Energy announced the investment plan along with 1-trillion-won worth of government funding for local display makers with the aim of Korean producers taking up 50 percent of the market share and increasing the technological gap with competitors.

Korea was defeated by China in terms of market share in the display industry last year for the first time in 17 years. The share of Korean companies stood at 33.2 percent, with China topping the list at 41.5 percent, according to the Korea Display Industry Association.

The push is to counter the growing share of Chinese panel makers not only in traditional liquid crystal displays but in more advanced organic light-emitting diode (OLED) markets.

“The display industry strategy announced today represents the first step to reclaim the top spot in the global display markets and the outcome of discussions between the government and the private sector about the challenges facing the industry,” said Industry Minister Lee Chang-yang Thursday.

“Let’s meet the target of reaching a 50 percent market share, widening the technological gap by five years, localizing the manufacturing of parts and materials by up to 80 percent and nurturing 9,000 engineers,” Lee said.

The ministry said that the 65 trillion won will be spent on building OLED manufacturing facilities and researching next-generation displays, although neither the companies nor the ministry detailed the breakdowns by each producer. OLEDs for tablets and laptops stand as the primary target of the new funding, according to the ministry.

The next-generation panels include micro LEDs and nano LEDs, which are made of inorganic luminescent materials to overcome some of the disadvantages of conventional OLEDs.

The planned five-year investment is larger than recent annual facility investments executed by the display duo.

Samsung Display invested 2.4 trillion won for facilities last year, but it upped the trajectory entering this year by spending 3.3 trillion won in the first quarter alone, according to its business reports.

LG Display plans to invest around 3 trillion won this year, after spending 5.2 trillion won in capital expenditure last year.

LG Display is in a tougher position than Samsung as it posted over 1 trillion won of operating loss in the first quarter on top of the 2 trillion loss last year primarily due to its focus on TV panels. Demand for TVs has been on a sharp decline, hit by weak consumer sentiment following the end of a spending spree on IT devices during Covid.

The company said last month that it could delay some of the investment plans previously proposed due to unfavorable market conditions in an electronic disclosure.

However, fed by hefty government subsidies, China’s BOE Technology Group is cranking up its production capacity and price competitiveness.

Apparently aware of the issue, the government will subsidize 420 billion won for the research and development of advanced display panels.

The remaining 320 billion won will be spent on supporting prototype production of panels for mixed-reality headsets, a new product line that incorporates OLEDs, and transparent OLEDs.

State-run banks will provide 900-billion-won worth of low-interest-rate loans for panel makers and display equipment manufacturers to facilitate the cash flow of the related companies.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]