[EXCLUSIVE] Samsung Electronics faces limited OLED TV production capacity
Samsung Electronics, the world's largest TV maker, is selectively releasing its first organic light-emitting diode (OLED) televisions in certain markets due to lack of capacity at Samsung Display, its OLED panel supplier.
The short supply is also boosting the possibility that Samsung Electronics will source OLED panels from LG Display, the world's largest supplier of the component.
"We've decided to bring the Samsung OLED models to North America and Europe through advance orders because Samsung Display's capacity is not able to cover the entire market," said a spokesperson at Samsung Electronics when asked why the company was not selling OLED sets in Korea yet.
Samsung Display's manufacturing capacity for the OLED Displays at this point is relatively low, at 30,000 a month, while LG Display can produce 170,000 per month at its plants in Paju, Gyeonggi and Guangzhou, China.
Samsung Electronics initiated advance sales of Samsung OLED models in the United States and Europe on March 18. The 55-inch model retails at $2199.99 and the 65-inch model $2999.99.
The pricing is comparable with similar models from LG Electronics but cheaper than those from Sony.
The Samsung OLED TV products use panels supplied by Samsung Display, a display maker 84.78-percent owned by Samsung Electronics.
The OLED panels deploy a blue OLED layer as a light source and a color filter of quantum dots to enhance luminance.
Samsung Display claims that the blue light source is capable of producing more vivid colors than LG Display's OLED panels, which use white OLED layers.
The TV maker packed its latest processor and sound system into Samsung OLED TVs.
"Samsung OLED brings together the cutting edge performance of the Neural Quantum Processor 4K and the intelligent experiences of the Tizen platform with the incredible sound experiences of Samsung Object Tracking Sound and Q-Symphony-with Dolby Atmos," the company said in a statement.
Its entry into the OLED market is seen as a big strategic shift in focus from traditional liquid crystal display (LCD)-based TVs as price-cutting Chinese manufacturers up their market share.
Major Korean display makers — LG Display and Samsung Display — are reducing production capacity for LCD panels for TVs, with Samsung Display planning to end LCD panel production this year.
Chinese panel makers such as Beijing's BOE Technologies and Shenzhen's China Star Optoelectronics Technology (CSOT) emerged as the dominant players in LCD panel markets after acquiring LCD factories from Korean display makers.
At the same time, OLED TVs have entered the mainstream as prices have dropped significantly since they were first introduced about a decade ago.
LG Electronics shipped over 4 million OLED TVs in 2021, more than double its shipments in 2020, according to market tracker Omdia.
Shipments of LCD panels for TVs will likely decrease by 2 percent to 254 million this year compared to the previous year, according to Omdia. Sales of OLED panels will jump by 25 percent to top 10 million this year.
Analysts believe that if Samsung Electronics is to become a major seller of OLED TVs, a partnership with LG Display is inevitable.
LG Display CEO Jeong Ho-young said last week that the company is amenable to selling OLED panels to Samsung Electronics.
"The possibility remains open if conditions are met and the situation is win-win," the CEO told reporters after a shareholders meeting.
Samsung Electronics Vice Chairman Han Jong-hee also struck a positive tone during the CES trade show in January, saying that "all possibilities are open."
Analysts are already doing the math on how many panels LG Display will supply to Samsung Electronics.
"To sustain its market share in the premium TV segment, Samsung Electronics ought to source LG's WOLED panels," said Jung Won-seok, an analyst at Hi Investment & Securities, estimating that Samsung will order enough LG OLEDs in 2022 to produce 1 million to 1.5 million TVs.
Jung projects that the total will increase to 4 million in 2023 and to 5 million in 2024.
BY PARK EUN-JEE [email@example.com]