By Kim Yoo-chul
Staff Reporter

LG Display has been in talks with the handset giant Nokia to supply it with next-generation AM OLED touch-screens, with the latter more optimistic about OLED applications on the global mobile phone market, a high-ranking industry source told The Korea Times Friday.

"Some technical issues still remain and actual shipping to Nokia will materialize in a year," the source said

An LG Display spokesman said many options are possible and the approach to Nokia is in line with LG's strategy to diversify its client channels.

Currently, Nokia has two main supply companies ― TPO and Samsung Mobile Display for AM OLED panels.

Nokia has used a 2.6-inch AM OLED panel in its N85 mobile phone and the vendor plans to introduce several more OLED handsets this year.

"The Finnish company wants to produce more mobile phones with AM OLED displays," said the source.

AM OLED, which stands for active-matrix organic light-emitting diodes, uses less power and produces a sharper image than traditional LCD displays.

Although higher production costs and lackluster consumer acceptance of such panels are still casting doubts over their short-term commercial viability, leading mobile phone makers such as Samsung Electronics are betting on phones with AM OLED panels to create a new market.

"There is no reason for Nokia not to get AM OLED panels from LG Display. Nokia needs to expand its procurement patterns for the panels, while LG Display is tasked with finding reliable and stable clients to sell the next-generation flat-panels to," Peter Yu, an analyst at BNP Paribas in Seoul, said.

"I doubt LG Display could meet the panel demand from Nokia as LG's AM OLED production volume is small," he said.

LG Electronics, the biggest shareholder in LG Display, earlier clarified it has no plan to introduce a series of AM OLED phones as the world's No. 3 handset maker is negative over the marketability of the next-generation devices.

LG Boosting AM OLED Business

LG Display, which trails Samsung Electronics in the global LCD panel market, is increasing its investment in AM OLED displays to supersede the dominant LCD and plasma technology.

The company, which invested about 100 billion won or $79 million in AM OLED production lines, will begin mass production in the latter half of 2010 for mobile phones.

"Equipment is coming to our 3.5-generation AM OLED line in Paju, Gyeonggi Province," the company spokesman said.

The company now has two AM OLED lines with a combined annual production capacity of 2.4 million panels for mobile phones.

LG and industry sources have said the company's OLED business unit has recently doubled the number of research staff members.

Meanwhile, it recently signed a memorandum of understanding with Japan's Idemitsu to collaborate in the development of flat-panels based on AM OLED technology.

"While mobile phones and other small devices are now the main target for the technology, they require multiple sources of suppliers with sufficient volumes to meet demand," said An Seong-ho at Hannuri Investment & Securities. "More supply creates more demand."

LG Display will release its second quarter earnings report on July 16. It is widely expected that the company will see a turnaround in quarterly profits thanks to increasing shipment of LCD panels and rising panel prices.

yckim@koreatimes.co.kr