When you look at the price reductions on LG’s OLED TVs over the last year or so you are inclined to believe the company when it says that OLED TVs can become cheaper than LCD TVs - at least in theory. LG tells us that 80% of the OLED TVs manufactured can now be sold to customers.
Price drop due to improved production
It is tempting to conclude the the huge price drop from 15,000 US dollars at the time of launch to less than 3,000 US dollars now is motivated by bad sales numbers. But LG tells us that the story is quite different.
The dizzying price drop is an effect of drastic improvements in production efficiency. In the early days, LG had very low production yields at around 20-30%, meaning that only 20-30% of all OLED TVs produced could be sold. At IFA, LG told us that production yields have now reached 80%, which is why LG is able to sell an OLED TV for less than 3,000 dollars.
By the time LG hits 95% yields, the company should be able to produce OLED TVs at lower production costs than LCD TVs - if everything goes according to plan that is. This kind of optimism leads LG to believe that in about three years from now sales of OLED TVs and LCD TVs will be 50/50.
3 years from now sales of OLED TVs & LCD TVs will be 50/50
As you probably know by now, LG is producing OLED displays based on a different pixel structure than Samsung. LG is using white OLED pixels with color filters, whereas Samsung is using RGB (red, green, blue) pixels. During our talk, LG told us that the company has experimented with RGB pixels for OLEDs, too, but that yields were only around 10%. Rumors say that Samsung’s number is higher, but Samsung has never publicly commented on the matter.
Later this year, LG’s new ultra-modern production facilities will start operating, and by that time LG will be able to produce larger and cheaper OLED displays. The plant is currently in a testing phase, which is why we are seeing LG slowly roll out its first 4K OLED TVs at the moment.
The new OLED plant will go into full swing very soon, and production capacity will be expanded in phases. One of the key pillars in LG’s OLED strategy is to sell OLED panels to other TV makers. Chinese manufacturers have already starting using LG’s panels, and rumors say that Sony and Panasonic are also interested.
LG has just launched a new 55-inch OLED TV for $3500 and LG’s 4K OLED TVs will be available in the US and Europe starting next month.