Chinese display makers' control over LCD panel production and government-led mergers threaten to break South Korea's dominance in the TV and display market, warns UBI Research.
Much like South Korea's LG and Samsung outcompeted Japan's Sony, Sharp, Toshiba and Pioneer in the display and TV market years ago, China's new wave of display makers could do the same to South Korea by limiting LG Electronics and Samsung Electronics' access to LCD panels.
That is according to UBI Research CEO Choong Hoon Yi in an interview with Korean newspaper The Elec.
- "Chinese display panel makers monopolizing the liquid crystal display (LCD) market will in the long run threaten the TV businesses of Samsung and LG," wrote The Elec. "The collapse of Samsung and LG’s TV businesses will cause any businesses under them in the value chain, such as display panels, to fall along with it, the CEO warned."
Reliance on China for LCD TV panelsSamsung Display stopped producing LCD panels entirely last year, as it was no longer profitable. LG Display ended LCD production in South Korea while its last remaining LCD factory in Guangzhou, China, remains in operation at half capacity.
LG Display and Samsung Display supply, or supplied, LCD panels to LG Electronics and Samsung Electronics, but also many other TV brands.
As a result, Samsung Electronics in particular now has to procure all LCD panels for its "QLED" TV models from China or elsewere. All Samsung TV models except S95B, S90C, and S95C use LCD panels.
Chinese display makers are also ramping up investment in next-gen displays such as OLED. Here's an 8K OLED from BOE
Government-led mergersUBI Research further said that the Chinese government is accelerating a plan to merge some display makers in order to gain control of three key segments of the display market. The government holds stakes in these companies.
Chinese display panel makers include TCL (CSoT), BOE, HKC, Tianma, and others.
Consumers are already seeing some effects of this. For example, multiple Samsung TV models use LCD panels from TCL (CSoT) and are more expensive than TCL's comparable models including the 98-inch.
UBI Research said that LG Display is in talks with TCL to sell its remaining LCD factory in Guangzhou.
- Source: The Elec, UBI Research