Samsung Electronics-LG Display OLED deal stalls

Samsung Display's OLED screens are displayed during the 2022 CES in Las Vegas. [YONHAP]

Samsung Electronics will not likely be using LG Display organic light-emitting diode (OLED) panels in its televisions this year as the two companies have been unable to reach a supply agreement in time.

"If we are to use LG OLED panels in our products this year, the discussion would have to have been concluded by now," said a spokesperson from Samsung Electronics. "So chances are slim that we will release TV sets with LG OLEDs.

"Still, all possibilities remain open for future orders, although nothing is decided," he said.

The recent fall in the price of LCD panels has made the LG Display deal less attractive for Samsung Electronics, as it is more attractive to continue to make LCD screens.

"The main TV brand for Samsung Electronics is the Neo QLED, which has an LCD main panel," said Yi Choong-hoon, head of display-focused market tracker UB Industry Research.

"Given that LCD panel prices are dramatically decreasing, Samsung Electronics might opt to focus on the Neo QLED models this year," Yi said.

Last year, the price of LCD panels soared, making high-end LCD TVs as expensive as entry-level OLED TVs.

"At that time, Samsung Electronics may have been under great pressure to quickly migrate to OLED TVs. But when LCD panels are cheap, the manufacturer will be less incentivized to push through with the transition," Yi said.

The slide in prices of the panel type stems from a glut caused by sluggish demand for laptop computers, monitors and TVs.

Samsung Electronics released its first OLED televisions in March in certain markets by sourcing OLED screens from Samsung Display, a panel maker 84.78 percent owned by Samsung Electronics.

But 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.

The Samsung Electronics subsidiary began producing QD-OLED panels in the fourth quarter of last year and has significantly improved production yields to around 80 percent, according to local press.

Samsung Display declined to comment about the yield rate.

The panel supplier exited production of LCDs earlier this month, squeezed by competition from price-cutting Chinese suppliers and lower demand for LCD TVs.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]