Samsung SDI defies trends, turns in strong Q3 performance

Polarizing film [Courtesy of Samsung SDI]

As domestic petrochemical companies struggle with their polarizing film businesses due to more affordable products from Chinese competitors, Samsung SDI Co.’s electronic materials division notably remained strong in the large polarizing film business for TVs.

According to Samsung SDI on Tuesday, its electronic materials division, which produces materials for chips and display panels, achieved solid results in the third quarter of 2023 despite worsening front-end demand. The sales revenue stood at 608.2 billion won ($463.2 million) for the quarter, reflecting a 6.6 percent increase compared to the previous quarter, and operating profits increased by 35.6 percent to 84.2 billion won over the same period. Compared to the same period last year, revenue rose by 13.9 percent, and operating profit was up by 3.8 percent.

Many petrochemical industry players have been grappling with the display film business, with LG Chem Ltd. selling its film business under its IT materials division to a Chinese company, including its polarizing plates and polarizing plate materials business. Kolon Industries Inc.’s film and electronic materials division has been seeing losses for six consecutive months, even as the division supplied transparent polyimide (CPI) for foldable phones in the Chinese market.

Amid these industry-wide struggles, Samsung SDI seems to have been able to overcome a decrease in demand for information technology products and enjoyed success in the polarizing film sector due to its focus on the high-value-added large polarizing film business.

Polarizing film is an optical film used in panels to block or transmit light according to electrical signals combined with liquid crystal, adjusting pixel brightness, and reproducing colors. While Chinese companies are getting increasingly competitive in the small polarizing film sector for IT products with their more affordable products, Samsung SDI excels in the TV polarizing film sector. Samsung SDI supplies polarizing film not only to its affiliate Samsung Display but also to BOE Technology Group Co., TCL China Star Optoelectronics Technology Co. Ltd., and AUO Corp.

As China becomes the largest manufacturer of liquid crystal displays (LCD), Samsung SDI entered the Chinese market early on. Samsung SDI has operated a polarizing film factory in Wuxi in Jiangsu Province since 2017, in preparation for the trend of bigger TVs in China.

In addition to polarizing film, Samsung SDI has diversified its portfolio by developing organic light-emitting diode (OLED) materials, foldable optical transparent adhesive (FOCA) films, and more.

The company’s electronic materials division also focuses on producing OLED deposition materials and thin-film encapsulation (TFE). TFE protects OLED components from external environmental factors such as moisture and air, and FOCA is a core material that enables the implementation of foldable displays.

In the third quarter, the demand increased for mobile products drove the revenue and profit growth of the division due to OLED materials. Samsung SDI’s OLED deposition materials and TFE are reportedly supplied to Samsung Display Co., and Samsung Display’s mobile OLED panels are used in Samsung Electronics Co.’s Galaxy series and Apple Inc.’s iPhone series.

The company’s research and development for producing high-value-added display materials are also witnessing results. Its phosphor green host premix material for OLED has received the IR52 Jang Young-shil Award in 2023 following its quantum light control (QLC) polarizing film in 2020. The award is widely recognized as one of the highest honors for innovation in Korea.