Rivals become allies? Samsung Electronics reportedly purchases LGD OLED panels

According to South Korean media Businesskorea on June 22, Samsung Electronics will adopt OLED panels from its competitor LG Display to gain a foothold in the OLED market.

Image source: Businesskorea

Samsung Electronics is expected to sign a purchase contract with LG Display, which will supply 2 million to 3 million OLED panels to Samsung Electronics annually from 2022 to 2024. According to Omdia data, the average price of 55-inch OLED panels in the first quarter of 2021 was US$510, which means that the contract value may exceed 5 trillion won.

Although Samsung Electronics has not yet released an OLED TV model, it is ready to officially enter the OLED TV market. Rather than waiting for Samsung Display to successfully develop QD-OLED panels, Samsung may prefer to purchase OLED TV panels from its competitor LG Display first.

Industry observers predict that Samsung Display will start mass production of QD OLED panels in 2021, but it will take considerable time to stabilize the yield rate in the early stages of production. Samsung Display is expected to ship no more than 1 million units next year.

Analysts said that it was unusual for Samsung Electronics to use LG OLED panels, as the two companies have long viewed each other as a fierce rival. In early 2017, when Japan's Sharp stopped supplying panels, Samsung Electronics purchased LCD TV panels from LG Display. Although Samsung Electronics and LG Display have discussed business cooperation many times in the past, they have failed to reach an agreement due to various reasons, including security issues.

The recent surge in LCD panel prices is also one of the reasons why Samsung decided to enter the OLED TV market to ensure its profitability in the global TV market. According to Omdia data, the average price of 55-inch general-purpose LCD panels reached US$200 in the first quarter of 2021, up 73.9% year-on-year, which is in sharp contrast to the 8.1% drop in OLED panel prices during the same period.

LG Display expects Samsung's entry into the OLED TV market to expand the OLED panel market. As of early 2021, there are 19 manufacturers producing OLED TVs around the world, including South Korea, the United States, Japan, China, and Europe. LG Display is the only company that supplies large OLED panels to these TV manufacturers.

Display market experts estimate that LG Display will ship 7.9 million large OLED panels in 2021. This is a significant increase from 4.5 million in 2020. Its OLED panel shipments will swell to 11.7 million next year.