[vc_row][vc_column][vc_column_text]LG Display Co Ltd of South Korea will begin selling high-end TV panels to Samsung Electronic Co Ltd as early as this quarter, according to three people, in a deal that will help the loss-making flat-screen producer turn profitable.
LG Display plans to ship 2 million devices next year, with shipments increasing to 3 million and 5 million units in succeeding years, according to two sources with firsthand knowledge of the situation. Initially, Samsung will most likely receive 77-inch and 83-inch white OLED (WOLED) TV panels.
The transaction exemplifies Samsung’s strategy of expanding into high-end organic light emitting diode (OLED) TVs while competition from Chinese vendors heats up at the lower end. OLED panels are roughly five times more expensive than LCD screens.
With this agreement, Samsung might overtake Sony Corp as the world’s second largest provider of OLED TVs.
Analysts assumed that LG Display was in talks with a new client to supply OLED TV panels. The specifics of the contract with Samsung Electronics were first reported by Reuters.
Because the transaction is not public, all of the sources declined to be identified.
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LG Display and Samsung Electronics both refused to comment.
Following the Reuters news, LG Display shares rose 2.4%, reversing a 1% decline earlier in the day. Shares of Samsung, which is primarily driven by its smartphone and semiconductor businesses, climbed 1.7%, outperforming the market’s 0.2% increase (.KS11).
Samsung Electronics, the world’s largest TV manufacturer, has been slower to embrace OLED TVs than its nearest competitor LG Electronics Inc, arguing that the technology is better suited to small devices such as smartphones and tablets, due in part to the high cost of panels.
According to analysts, sales of 2 million OLED panels will be a significant boost for LG Display, worth at least $1.5 billion and equating to about 20%-30% of its overall manufacturing capacity for large-size OLED panels, bringing it to full capacity.
Due to a narrow customer base and a pandemic-driven increase in demand for new TVs that has tapered off amid surging inflation and a faltering economy, the business has been running its OLED manufacturing at less than full capacity.
“LG’s production rate will improve and is likely to reach full capacity next year, helping it lay the groundwork for a return to profit,” said Jeff Kim, an analyst at KB Securities.
Due to deteriorating global demand for electrical products, the corporation has been in the red for four straight quarters since the second quarter of last year.
LG Electronics and Sony use the company’s OLED TV panels. It also provides iPhone displays to Apple Inc.
Samsung Electronics has its own display-making arm, Samsung Display, which concentrates on OLED screens for Apple and Samsung smartphones.
According to market research firm Omdia, Samsung presently has a 6.1% market share in OLED TVs, trailing LG Electronics with 54.6% and Sony with 26.1%.
According to Omdia, the market is predicted to rise roughly 6% this year to $11.7 billion, and to $12.9 billion by 2027.[/vc_column_text][/vc_column][/vc_row]
