According to the latest report, Samsung Electronics and LG Electronics are about to reach a rare partnership, and the two sides are in final negotiations on the supply of panels for Samsung OLED TVs.
“Until the beginning of this year, their cooperation prospects have dimmed for at least this year. But recently the talks have accelerated,” an industry source said on condition of anonymity, according to the Korea Herald.
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Moreover, Samsung Electronics will launch new TVs later this year, with the first panels likely to start shipping as early as September, given the preparations for the production line.
Samsung Electronics withdrew from the then-nascent OLED TV market nearly 10 years ago, putting more resources into upgrading higher-margin LCD TVs. At present, with OLED TVs accounting for 40% of global high-end TV sales, Samsung Electronics’ main competitor LG Electronics has become the main force in the market, and Samsung Electronics will re-compete in this emerging market.
But Samsung Electronics’ revival plan has hit a snag, and its display-making subsidiary Samsung Display is still struggling to improve yields. The latter can produce 30,000 OLED TV panels per month, the equivalent of 1 million 55- and 65-inch TVs per year. However, due to the low initial production efficiency, the actual production scale is expected to be maintained at around 500,000-600,000 units per year.
Furthermore, OLEDs account for 15-20% of the total TV sales of rivals such as LG and Sony, so if Samsung Electronics wants to achieve economies of scale, it will have to increase TV sales to around 3 million units.
The panel shortage has prompted Samsung Electronics to seek unprecedented help from LG Electronics subsidiary LG Display, and the two longtime rivals have been in talks for months over a possible partnership.
Lee Choong-hoon, CEO and principal analyst at UBI Research, said: “It’s a win-win deal: Samsung gets the panels that are critical to its return to OLED, while LG has been expanding production capacity to meet growing demand. OLED demand.” But he also believes that this is a difficult negotiation, with both sides investing huge sums of money for a long-term contract of 3 to 5 years.
“In addition to supply and price, adjusting for differences in interests between subsidiaries is also a tricky issue,” he said, referring to the two companies’ fierce competition in nearly everything from home appliances to displays. “All subsidiaries of Samsung Electronics and LG Electronics will make compromises.”
OLED TVs were absent again at Samsung Electronics’ new TV launch event on the 30th, sparking speculation that Samsung is still struggling to obtain panels due to stalled talks with LG. Separately, Samsung Electronics recently started taking pre-orders for new QD-OLED TVs in the US but failed to launch a full-scale marketing campaign due to panel shortages.
“Samsung started planning the 30th event at the end of last year when negotiations with LG were shrouded in uncertainty,” Lee Choong-hoon said. “Samsung Electronics may also be worried that the newly launched QLED TV will be seized.” Negotiations with LG Electronics have made new progress, and Samsung Electronics has also raised its sales target for OLED TVs this year to 1.5-2 million units.
