Samsung, LG strike unlikely TV partnership in battle with cut-price China

Once furious rivals in the television market, Korean electronics giants Samsung and LG are mending ties, with the former using the latter's TV panels.

LG Display's organic light-emitting diode (OLED) panel manufacturing plant in Guangzhou. [LG DISPLAY]

Once furious rivals in the television market, Korean electronics giants Samsung and LG are mending ties, with the former using the latter's TV panels.

Samsung Electronics has emerged as a major client for LG Display's liquid crystal display (LCD) and organic light-emitting diode (OLED) panels as they work toward staving off competition from price-cutting Chinese display and TV makers amid sluggish sales.

Production lines at LG Display’s LCD panel manufacturing plant in Guangzhou — Korea’s sole LCD manufacturer for TV screens following Samsung Display’s plant shutdown in 2021 — have been running full steam ahead, as production rose 80 percent compared to last year.

The LCD panels made in the Guangzhou plant will be used by both Samsung and LG, who place first and second in terms of global television market share with 29.9 percent and 16.4 percent as of last year’s third quarter, respectively.

Samsung Electronics will purchase a large proportion of the LCD panels manufactured in LG Display’s Guangzhou factory this year, according to industry insiders.

Samsung’s quantum dot light-emitting diode (QLED) TVs, its main TV line, layers a film of quantum dots, or semiconductor nanocrystals, on top of LCD panels to enhance screen resolution. The LCD panels used in the screens will be purchased from LG Display starting this year. Samsung had cut off Chinese panel supply chains over a patent infringement dispute with Chinese electronic components producer BOE. LCD panels for use in quantum nano-emitting diode (QNED) TVs, which LG Electronics has been pursuing along with its OLED panels as the two main pillars of its TV business, are also produced at the Guangzhou plant. This means identical panels manufactured at the same factory will be used for both of the two companies’ flagship TVs.

Their partnership is also set to expand to OLEDs, which are considered the next-generation technology to LCDs. Samsung Electronics will reportedly increase the number of OLED panels it buys from LG Display for its TVs. Since last year, the company has been using not only QD-OLED panels produced by its subsidiary Samsung Display but has also purchased W-OLED panels from LG Display to use on Samsung TVs.

Samsung’s strategy is to expand its OLED TV lineup to maintain its share in the premium television market. Currently, Samsung Display is the top manufacturer of small- and medium-sized OLED panels, but LG Display is the global leader for ultra large OLED panels for use in TVs.

Television screens for sale are on display at a supermarket in Korea. Picture taken Nov. 1, 2022. [NEWS1]

The motivation behind the unlikely partnership stems from the currently dire television market. The economic recession has seen global TV shipments fall below 200 million for the first time in 13 years. Chinese display businesses, with its government support, are gaining more traction in the market. On Samsung and LG’s heels are China’s TCL and Hisense, who are not only putting out competitive low- to midpriced LCD TVs, but also QLED TVs and LED TVs that directly compete against Korean businesses’ ultra-large and premium lineups.

For the two companies, a sense of crisis remains despite their partnership. This is because the fact remains that the OLED TV market is still minuscule.

OLED TV shipments make up less than 5 percent of the entire global TV market, according to London-based market researcher Omdia. The number of shipments has not gone above seven million over the last three consecutive years.

Samsung, which has already grabbed a large hold over the market for small- and medium-sized OLED panels used in smartphones and tablets, is not in a rush to transition into the slow-growing OLED TV market. The market situation also makes it advantageous for them to negotiate prices with its panel supplier, LG Display. LG Electronics is expected to boost profits this year by putting QNED TVs, made using LCD panels, at its forefront along with the pricier OLED TVs.

“In the long run, we must put a lid on China’s challenge [in the market] by putting out formidable quality and volume,” a display industry insider said. “The two companies will need to join hands for the time being.”

BY LEE HEE-KWON [kim.juyeon2@joongang.co.kr]