Global QD-OLED is expected to exceed 1 million units in 2024

Samsung Electronics (Korean: 삼성전자[1]) is the largest electronics company in South Korea and the largest subsidiary of Samsung Group. Samsung Electronics was founded in Daegu, South Korea in March 1938 by Lee Byung-chul. The vice-chairmen are Lee Jae-yong and Kwon Oh-hyun, the president is Choi Ji-sung, and the CEO is a co-CEO consisting of Kwon Oh-hyun, Shin Jong-kyun, and Yoon Boo-geun.

In the list of the world's 100 most famous trademarks, Samsung Electronics is the only Korean trademark and a symbol of Korean national industry. [2] On November 12, 2014, according to foreign media reports, Samsung Electronics has sued Nvidia, claiming that it has infringed on several of the company's semiconductor-related patents and placed false advertisements for related products. In September 2014, Nvidia took Samsung to court. In October 2019, it ranked third on the 2019 Forbes Global Digital Economy Top 100 list.

Premier Li Keqiang said: Samsung Electronics' wholly-owned subsidiaries in China have accumulated a total investment of US$10.87 billion, with an estimated total investment of US$15 billion. Samsung is welcome to continue to expand its investment in China. Samsung's cooperation with China over the years has fully proved that high-tech cooperation will definitely bring high value-added returns. On February 21, 2020, Samsung Electronics announced the appointment of 65-year-old former South Korean Finance Minister Park Jae-wan as the new chairman of the board of directors.

Samsung Electronics has temporarily halted new purchase orders and asked several suppliers to delay or reduce shipments of components for several weeks due to bloated inventories and concerns about global inflation, Nikkei reported, citing sources.

People familiar with the matter said that Samsung Electronics' notice covers components for several key product lines such as TVs, home appliances and smartphones, and the postponed orders involve chips, electronic components, etc.

It is understood that the financial report shows that Samsung Electronics' revenue in the first quarter of fiscal year 2022 was 77.7815 trillion won, a year-on-year increase of 19%; operating profit was 14.1214 trillion won, a year-on-year increase of 51%, the highest level since 2018.

Earlier this week, the industry had heard that Samsung Electronics would reduce its panel purchases. But just a few days later, Samsung Electronics changed its mind and became more "radical".

An industry insider told the China Times reporter that according to his understanding, this time the notice of suspension of purchases was directly issued by Samsung Electronics senior management after an internal inventory count, "not only panels, but other materials have been suspended."

High inventory is an important reason why Samsung Electronics has pressed the pause button on purchases. Rong Chaoping, senior research manager at Avrevo, told reporters that Samsung Electronics' current TV inventory weeks are close to 16 weeks, "the highest among TV brands", while its relatively safe level is 10-12 weeks of inventory. He also told reporters that due to concerns that its own panel manufacturer SDC would withdraw from the LCD panel industry, Samsung Electronics' TV business has begun to adopt a high inventory operation strategy since the fourth quarter of last year.

Recently, industry sources said that SDC will completely stop LCD panel production in June this year. Although this time is delayed by one and a half years from its original plan, it is also six months earlier than the previously set time node of the end of 2022.

However, Samsung Electronics' stockpiling strategy encountered a sluggish performance in the TV terminal market.

According to a reporter from the China Times, factors such as the Russia-Ukraine conflict, repeated outbreaks, and global inflation have led to a continued decline in demand for downstream consumer terminals such as televisions and mobile phones since 2022. Data released by market research firm Omdia showed that global TV sales in the first quarter of this year were 49.07 million units, with sales of US$25.675 billion, down 4.3% and 6.3% year-on-year respectively.

AVC Revo said in its report that the North American and European retail markets have both seen a sharp year-on-year decline this year, bringing great shipment pressure to Samsung Electronics. It is expected that Samsung Electronics' TV set shipments will drop 2.9% year-on-year in the second quarter of this year, and will increase slightly by 4.8% in the third quarter based on last year's low base.

When it comes to panels, the largest component that accounts for about 70% of the cost of a TV, it has become the first target of Samsung Electronics' biggest order cuts.

Yi Xianjing, deputy general manager of Dixian Information, told the China Times reporter that from a cash flow perspective, under the pressure of high channel inventory and factory inventory, Samsung Electronics faces the risk of high capital occupation and inventory impairment. On the other hand, the weakness of the terminal market will cause Samsung Electronics' cash flow back to slow down, which will in turn affect the panel procurement that already occupies a high capital occupation.

Yi Xianjing believes that Samsung needs to conduct a comprehensive review of its inventory levels and procurement strategies due to weak market demand and excessive inventory pressure that have led to poor cash flow. "Therefore, although Samsung's notification to panel manufacturers to suspend shipments was unexpected, it is reasonable." He estimates that Samsung's suspension of procurement will last about one month.

As the leader in the global TV industry, Samsung Electronics' move has certain significant significance.

According to data from Disian Information, Samsung Electronics ranked first in global TV shipments last year with a 19% share, while LG, also a Korean manufacturer, ranked second with a 12% share. TCL, Hisense, and Xiaomi, three domestic manufacturers, ranked third, fourth, and fifth with 10%, 9%, and 6% shares respectively. Japan's Sony ranked sixth in the global TV market with a 4% share.

Rong Chaoping told the China Times that he has not heard of other TV brands making adjustments, but each brand is indeed reorganizing its purchasing strategy. Another industry insider told the reporter that based on past experience, LG is likely to follow Samsung Electronics' steps.

The adjustments made by TV brand manufacturers have dashed the hopes of panel manufacturers that they would raise prices by reducing production in the third quarter of this year.

According to a reporter from the China Times, in June, news of panel factory production cuts has been reported in the industry. Among them, it is reported that BOE and TCL Huaxing will reduce the amount of large-size panel mother glass by 25% and 20% respectively starting from June. However, as of press time, neither company has confirmed to reporters whether the news is accurate. At present, Samsung's first QD-OLED TV S95B series has been launched in the European and American markets. Public information shows that the yield of Samsung QD-OLED panels has increased to 80% and will soon increase to 90%, which means more capacity increase and better cost control. In addition, it is expected that in the second half of 2023, Samsung Display's second QD-OLED panel production line will also be mass-produced.

According to Qunzhi Consulting, the global QD-OLED TV shipment volume in 2022 is expected to be about 700,000 units. The shipment volume will grow steadily in the future, and is expected to exceed 1 million units in 2024.

This shipment scale is somewhat different from the WOLED TV market dominated by LGD, but it should be noted that WOLED TV shipments in 2021 have just crossed the threshold of 6 million units, and the overall shipments this year are expected to be around 8 million units. It should be noted that it has been nearly 10 years since LGD first launched OLED TVs.

The yield and production capacity of Samsung's own QD-OLED panels are steadily improving, and the Neo QLED TV currently promoted by Samsung Electronics, which combines Mini LED and quantum dot technology, is also occupying the high-end market. Therefore, even if LGD's WOLED panels are not used, it will not have much impact on Samsung's high-end TV strategy.

Second, the global TV market, including the Chinese market, has been in an overall downturn this year, and the growth of OLED TVs has slowed significantly.

Data from market research firm Omdia shows that TV shipments in North America, Europe and China fell by about 20% year-on-year in the first quarter of 2022. Global TV shipments are expected to reach 211.6 million units in 2022, which will be the lowest level since 2010.

At the beginning of the year, many market institutions predicted that OLED TV shipments in 2022 would reach 10 million units, but now it seems that this is an impossible goal. RUNTO Technology has lowered its forecast for global OLED TV shipments in 2022, predicting that OLED TV shipments this year will be 7.9-8.1 million units, a drop of about half from 6.5 million units in 2021, from 53.8% to 23%.

Against the backdrop of a clear slowdown in the growth of the OLED TV market, Samsung Electronics actually has no urgency to purchase LGD panels.

On the whole, Ding Technology believes that on the one hand, the high-end market has alternative products such as QD-OLED and Nea QLED to fill the gap, and on the other hand, the growth of the OLED TV market is lower than expected. Therefore, it is not surprising that Samsung Electronics has suspended negotiations with LGD.

For LGD, the suspension of cooperation with Samsung is definitely not good news. But overall, LGD still has advantages in time and production capacity, and needs to further upgrade its technology to prevent Samsung's QD-OLED from overtaking it in technology and market.