Can Korea fend off China in display race?

Industry

Published: 15 Feb. 2024, 07:00

Can Korea fend off China in display race?

Samsung Display's 'Flex Note Extendable' which is able to extend its display panel by sliding and unfolding. The technology was unveiled at the CES 2024 held in Las Vegas in January. [SAMSUNG DISPLAY]

Apple's approval of China's BOE as its iPhone display supplier in 2021 sent a jolt across a Korean panel industry well-aware that Apple is a tricky client to satisfy with rigid quality standards.

It was a signal that China — which already invests quite a bit more than Korea does in the PC and automotive sectors — was in hot pursuit of the country when it comes to OLED (organic light-emitting diode) technology for mobile phones.

More ominous is the fact that China has already overtaken Korea in the traditional LCD (liquid crystal display) market, armed with cheap, mass-produced products.

There is likely not much time left before the more sophisticated OLED segment faces the same fate.

A recent study from UBI Research indicated that China would outdo Korea's mobile OLED panels in two years. China's share, which stood at 42.4 percent in 2023, will expand to 54.8 percent in 2025 while that of Korea is projected to shrink from 57.6 percent to 45.2 percent during the same period.

BOE is also reportedly supplying OLED panels for the newest iPhone 15 series' base model while striving to get verification for the more premium Plus models as well.

Before BOE entered the scene, Samsung and LG had the iPhone's display supply all to themselves.

“Backed by state funds and the transfer of technology and engineers, China is fast chasing after Korea in display technology,” said Yi Choong-hoon, CEO and analyst at UBI Research.

“China has been focusing on mobile OLEDs for nearly a decade now and it is coming to fruition. Korea has to think of how to wisely use the resources it has to maintain a competitive edge in the market because, capital-wise, there is no way Korea can outrun China.”

People visit the exhibition area of China's BOE Technology Group during the Display Week 2023 in Los Angeles, the United States, on May 23, 2023. Chinese brands gained a strong foothold at the Display Week 2023, a world's leading show of the display industry held this week in Los Angeles, attracting lots of attention and winning recognition for their innovative technologies and products. [XINHUA/YONHAP]

China's way of catching up
China's effort to achieve technological autonomy in displays is as stringent as it is in semiconductors.

The industry is supported on a national level by vast subsidies that are offered to companies investing in next-generation panel technology, similarly to the way in which China came to dominate the LCD segment.

BOE, for example, which announced a 11.5 trillion won ($8.6 million) investment in 8.6-generation IT OLED last November will have the regional government covering an estimated 30 percent of the funds.

The transfer of proprietary technology and engineers from Korea, most of which is done in a shady way, is another significant element of China's rapid catch-up.

Last July, Korea's Supreme Court found a dozen executives and employees of Samsung Display supplier Toptec guilty of leaking key technological assets to BOE.

Samsung Display sued BOE, in relation to the case, for trade secret misappropriation with the International Trade Commission in November. It also filed a separate suit against the company with Eastern District Court of Texas earlier last year, citing infringement on its edge panel technology for smartphones.

LG Display unveiled the 57-inch LCD panel for automotive at the CES 2024 in Las Vagas in January. [LG DISPLAY]

Focus on IT
Despite China's aggressive expansion into the OLED market, the nation's footprint is largely limited to small mobile panels at the moment.

Korea is eyeing bigger opportunities in the IT sector, including midsized panels for tablets and laptops. Apple recently announced that it would deploy OLED panels for its iPad lineup rather than LCD screens.

Samsung Display was quick to move. After completely ditching the unprofitable LCD business in 2022, the company announced a 4.1 trillion won investment plan last year that would set up manufacturing lines for 8.6-generation IT OLED panels through 2026. Those facilities could make 10 million units per year.

“Samsung Display was quick to make judgment that IT OLED demands will rise in the future as most of the IT devices at the moment are deployed with LCD panels destined to be exchanged with OLED ones,” said an industry insider who wished to remain anonymous. “They will be the first to start mass production somewhere around 2025 or 2026.”

The company's ambition in the up-and-coming segment was apparent at its CES 2024 booth in Las Vegas this January.

At the front of the space was the Flex Note Extendable, a foldable and slidable panel for vehicle display applications that can be extended from 11 inches to 17.3 inches when fully stretched out.

A mock-up of a vehicle adorned with Samsung's latest IT displays at the center of the booth emphasized that the panel maker is banking on the automobile sector as a new growth driver.

LG Display is also upping the ante in automotive OLED panels. Since jumping into the segment in 2019, LG Display said it has secured 10 carmakers, including Mercedes-Benz, as clients.

LG Electronics presents a media art made of 15 LG Signature OLED T panels at its booth at the CES 2024 in Las Vegas in January. [LG ELECTRONICS]

Korea still excels in TV

China is focusing on Mini LED — an advanced version of an LCD that uses microscopic light emitting diodes as backlights — for TV sets as the technology for large OLED panels is still nascent.

TCL, for example, dropped a 115-inch model of its QM8 Mini LED TV at CES 2024, while Hisense unveiled a 110-inch Mini LED TV with an unspecified launch date.

Gigantic screens vividly displaying waterfalls continuously lured visitors to TCL's booth at the show.

“I see TCL and other Chinese brands catching up in their own way with Mini LEDs,” said Arian Karemi, a tech influencer with 53,000 Instagram followers, as he toured the Chinese booth. “Samsung is already doing most of the stuff, but we always need the competition.”

Korea, on the other hand, is not sticking to the “bigger the better” strategy for screens. Instead, it is adding innovative features to its OLED panels for TVs in order to maintain a fair distance from Chinese competitors.

LG Electronics, for example, unveiled the world's first wireless, transparent OLED TV, slated to hit the market this year, at CES 2024. Its confidence in the technology was palpable in its booth at the trade show, where it greeted visitors with a massive media exhibition comprising of 15 transparent OLED panels.

By volume, Chinese players are climbing their way up the ladder.

In 2023, TCL and Hisense ranked in second and third spot in terms of TV shipment volume due to abundant sales of their cost-effective Mini LED TVs. Samsung held the top spot while LG Electronics dropped to fourth.

By sales, however, LG Electronics still maintains the second position — backed by its premium OLED TVs — followed by TCL and Hisense.

“By how many TVs you sold, it is true that China is fast chasing, but there is still a big discrepancy in terms of sales,” said Baek Sun-pil, head of TV products planning at LG Electronics.

“In terms of value, China is not a match, " Baek said.

Chinese TV maker TCL's booth brims with visitors at the CES 2024 in Las Vegas in January, signaling Chinese companies' comeback to the tech trade show. [JIN EUN-SOO]

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]