By Kim Yoo-chul
Leading display manufacturers, such as Samsung and LG Display, are looking for a breakthrough in the auto-display market thanks to the growing demand amid the convergence of cars and IT technologies.
This shift in business focus has also been driven by the desire to boost growth due to the sluggish sales of televisions.
In recent years, vehicles have become a focus in technology exhibitions such as the IFA in Germany and the ICES in the United States, as every aspect of the automobile ― from the engine to the headlights and entertainment system ― are increasingly transformed by technology.
Global automakers are pursuing partnerships with leading technology companies, and Korea’s two display suppliers have responded to the call with enthusiasm.
They sell displays for use in TVs, smartphones, tablets, notebooks and PCs.
However, the competition in the display market has intensified with the rise of Chinese suppliers, prompting the two Korean companies to look for new business segments.
“It’s no surprise to see leading automakers spearheading in-car technology and interconnectivity. Cars are increasingly considered as part of the wireless ecosystem offering a plethora of information and entertainment, and the next logical step is how such content is shown and viewed,” said an official at the Korea Display Industry Association (KDIA).
Similarly, the LG and Samsung affiliates believe automotive display is a rational business opportunity to which top management must pay more attention.
Major clients are pushing LG Display and Samsung Display to match the sizable discounts offered by Chinese panel suppliers, which puts pressure on the companies’ margins.
However, LG remains confident about its prospects in the segment.
“Automotive display is a whole new business segment for us, but we have bargaining power. Automakers ask panel suppliers to pass stricter quality standards such as durability, outdoor visibility, screen brightness and ability to withstand high temperatures. Very few display suppliers can meet such tough requirements,” said an official at LG Display.
In a statement to The Korea Times, LG Display said it plans to generate as much as $1 billion in revenue in automotive displays by supplying over 20 million glass sheets by 2016.
“We will grow our automotive LCD display business by 30 percent annually for the next three years. Our in-plane switching (IPS)-based display solutions have received warm responses from leading carmakers,” said the company.
Over the last few years, LG Display says it has been supplying automotive displays to Daimler AG’s Mercedes-Benz of Germany, Toyota and Honda of Japan and Hyundai and Kia of Korea.
Representatives of Mercedes-Benz, Toyota, Honda, Hyundai and Kia declined to confirm this information.
“Adaptation ratios by carmakers are improving, meaning that we can sell more displays,” the LG Display official said.
Automotive displays are categorized into center information displays, cluster displays, entertainment displays and head-up displays. The LG official said the company is trying to persuade leading automakers to purchase premium displays for use in clusters.
Samsung Display is also approaching automakers to diversify its business portfolio, which currently focuses on smartphones, TVs and tablets.
But analysts say LG is ahead of Samsung as it uses the client channels of LG Chem, the nation’s biggest chemical company, and fellow LG affiliates.
LG Chem has signed agreements with more than 20 global automakers to supply rechargeable batteries for electric vehicles.
While Samsung Group’s technology affiliates are performing better than LG affiliates in their respective markets, Samsung SDI is a latecomer in car batteries.
“Usually, three to four years are required for the development of new cars. That means display suppliers should be proactive and present new technologies with improved quality. It’s really tough to penetrate the automotive display market in a short time,” said an official at Samsung.
Samsung Display said it is eyeing automotive displays as it moves into advanced display solutions to bolster its profits, but declined to name its clients, citing the sensitivity of the issue.
DisplaySearch, a U.S.-based market research firm, expects shipments of auto displays to reach over 70 million by 2016, from 49 million in 2012.