China grows OLED business with Korean firms
Tim Alessi, left, head of new product development for home entertainment at LG Electronics USA, poses with Value Electronics Founder and President Robert John after LG’s 65-inch OLED TV was nominated as “King of TVs” for July. / Courtesy of LG Electronics
BOE proposes Samsung, LG partners for OLED venture
By Kim Yoo-chul
BOE, the biggest display manufacturer in China, has proposed setting up a joint venture in the organic light-emitting diode (OLED) business with partners of LG Display and Samsung Display, sources said Friday.
OLEDs are widely considered to be the next-generation displays, as unlike LCDs they don’t need to use bulky backlights, making the displays thinner and brighter. BOE has invested more on OLEDs for a bigger share in the growing market.
“Last month, an affiliate of BOE contacted several Korean parts suppliers and proposed that they set up a joint venture in China focusing on OLED displays. Key partners LG Display and Samsung Display are BOE’s targets for the venture,” one source said.
BOE promised those Korean suppliers guaranteed sales of their products in China.
“We are seriously considering accepting BOE’s business offer given the company’s guaranteed incentive to boost the sale of our products,” an executive at one of LG Display’s Korean partners approached by the Chinese firm said.
As LG Display and Samsung Display, the world’s top two display panel manufacturers, have shown reluctance to increase their investment in displays including OLEDs due to weak demand for consumer gadgets, the business proposal “does make sense” for Korean parts suppliers, said officials and experts.
“Survival is the key. We have no option but to expand the sale of our products. If we earn more, then we can invest in research and development (R&D) projects for corporate sustainability,” said the executive, adding BOE also plans to approach Japanese OLED suppliers as a “Plan B.”
China is a key market for Korean display component suppliers as major Chinese display companies including BOE have continued increasing their spending on displays, helping Korean suppliers earn more.
Analysts and officials; however, say if key Samsung and LG display partners join BOE for a joint venture in OLEDs, then issues over “technology leakage” will emerge as Korea is still ahead of companies in China in the OLED sector.
OLED displays are mostly being used in small mobile devices such as Samsung’s Galaxy smartphones, though the panel’s adaptation rates in profitable large-sized panels is still low as OLED TVs cost more with “unsatisfactory” production yields, according to officials.
“China aims to increase the country’s presence in OLEDs by offering huge incentives and subsidies. If BOE ties up with key Korean partners in OLEDs, then BOE will get more support from Beijing and this will negatively impact on Korea’s current lead in the business segment,” said one industry official.
A spokesman at LG Display in Seoul said it was considering building an additional OLED panel-producing line in Korea. However, he added its business plan has no relation to BOE’s attempts to lure Korean companies.
A spokesman at Samsung Display said the company had no comment on the issue.