Samsung Mobile keen on brighter flat-screens

AM-OLED venture aims at record sales amid booming demand

By Kim Yoo-chul

CHEONAN, South Chungcheong Province ― Being on top means everything at least in component-related businesses as the biggest vendors in memory chips or flat-screens enjoy undeniable bargaining power regardless of the sector’s cyclical nature.

Samsung is the biggest supplier of memory chips used in almost all electronic devices. It also leads the flat-screen market.

Now, Asia’s most valuable technology company is spending big for aggressive pushes for advanced and brighter flat-screen business amid the flattening demand for conventional LCDs and explosive growth for premium devices such as smartphones.

Its OLED joint venture, Samsung Mobile Display (SMD), has been showing the way. Samsung Electronics is the major shareholder in SMD, followed by Samsung SDI.

OLED technology is divided into two areas ― passive-matrix (PM) OLED and active-matrix (AM) OLED. PM-OLED is still the market’s mainstream, however, it is becoming outdated due to the technological limits for wider OLED applications.

SMD is taking AM-OLED technology as its frontrunner.

The entity was launched in January 2009 with an aim to lead the market in next-generation flat-screens (OLED) as Samsung was seeking breakthroughs in that area.

SMD is dominating global demand for AM-OLED, which requires less power and provides clearer picture quality and a much faster response time than existing LCD displays.

OLED screens are used in smartphones and other portable devices and SMD controls 90 percent of the market.

It operates three local facilities in Cheonan, Giheung and Tangjeong, while two Chinese factories including Tianjin back them up. SMD has overseas sales offices in the United States, Germany, Japan and the United Kingdom.

AM-OLED technology is now well developed and commercially available, meaning the entry barrier is lower than usual.

Citing the changing trend, markets have no big questions that this year will be another historical chapter for SMD thanks to the continued frenzy in smartphones and expanding OLED-embedded applications.

Its sister company Samsung Electronics, the world’s second-biggest handset maker, has sold over 10 million Galaxy S smartphones and predicted that the upgraded Galaxy S, the Galaxy S II, would be another 10-million seller.

``Leading smartphone makers such as Taiwan’s HTC among others, as well as Samsung, are asking SMD to supply more AM-OLED displays. Supply is very tight,’’ said Kim Sung-in, a senior analyst at Kium Securities, a local brokerage.

Sony and Olympus of Japan are currently putting AM-OLED panels into consumer products, while handset giant Nokia of Finland is releasing more AM-OLED-embedded variants as part of its strategy to revive its stalling handset business, according to company officials.

The leading research house said in a report that Samsung plans to allocate more to AM-OLEDs from this year’s investment projection of 5.4 trillion won for flat-screens as the firm needs transition for its flat-screen business away from the saturating LCD business.

``Splurging cash on AM-OLED output makes sense. The investment timing is reasonable. It’s too early to talk of oversupply in the AM-OLED market,’’ said Kim.

Oppenheimer analyst Michael Suh also sided with an upbeat SMD plan. ``Samsung appears to be expanding its AM-OLED manufacturing capacity. That’s a good sign of future demand for the company’s products.’’

What makes the outlook more positive is that Samsung and even Japan’s Sony, the world’s top-tier TV makers, are banking on OLED technology.

It seems that the market for LCD TVs has already peaked and is going to fall by as much as 3 percent to 4 percent a year.

Shim Jae-boo, a senior executive from the company said SMD is to expand its production lineup towards larger AM-OLED screens amid growing demand at its local facilities.

``With more investments for the right timing, SMD will boost leadership in existing AM-OLED panels and even for future applications such as flexible and transparent OLED displays,’’ said the SMD executive.

SMD is aiming to reap more than 10 trillion won in sales in 2012 from an estimated 7 trillion won throughout this year.

Korea Ratings, the nation’s leading credit rating agency, has raised its assessment of SMD to AA from AA- because it sees better cash flows and cash revenue abilities.

Easing worries over patents

As well as such ``hardware-centric’’ ventures, SMD also secured a ``significant springboard’’ to produce key materials without paying higher royalties or even being free of charge.

As the Korea Times exclusively reported, Universal Display lost the patent suit in Japan and their PH-OLED material patents have been invalidated, meaning other firms including SMD can manufacture phosphorescent OLED materials, at least in Japan.

``The ruling from Japan is crucial because SMD could produce such key materials used in OLED panels with greater availability,’’ said Kium Securities’ Kim.

Meanwhile, SMD won against Honeywell in another patent battle seven years after Honeywell filed litigation claims in the United States against 34 LCD manufacturers.

And there has been no slowdown in the pace of OLED display market growth. SMD plans to use the upbeat mood as a chance to develop its OLED-related technologies.

DisplaySearch, a market research firm, expects the global demand for AM-OLED screens to reach 500 million by 2015 from an estimated 133 million this year.

An SMD spokesman Kim Sung-jun said because the Galaxy S II’s ``Super OLED Plus’’ screen doesn’t require a pricey and energy-consuming backlight, blacks are rendered black rather than washed-out grey, as they tend to be on LCD screens.

``When it comes to overall picture quality and touch experience, the Super OLED Plus screen is expected to create a new boom for touch-based mobile devices,’’ said Kim at SMD.

When asked ``what’s next’’ for Samsung’s OLED unit, the SMD officials said; ``That would be flexible display and transparent display.’’

Flexible and transparent displays are categorized as business-to-business (B2B) segments and those applications are only used for commercial purposes such as advertisements on the streets and banners.

But these are ``new business areas,’’ that SMD is closely monitoring for greater availability.

SMD has developed a 30-inch OLED TV that eliminates dizziness and also developed a 6.5-inch flexible OLED display.

Earlier this year a 14-inch and a 19-inch transparent display and 4.5-inch flexible display were displayed at a technology exhibition in Las Vegas.

``We see the demand for flexible and transparent displays will significantly rise capitalizing on business-to-business areas. SMD has keen interests for big pushes towards those sectors,’’ said SMD executive Shim.

Samsung’s technology institute has recently developed a demo version of foldable AM-OLED display technology, which means a smartphone or a tablet screen could be folded.

But there are currently some drawbacks; it creased the screen when folded, leaving a permanent imperfection in the display.