Samsung buying less TV panels from BOE due to royalty issue

Samsung was buying fewer TV display panels from BOE due to a royalty issue, TheElec has learned.

The South Korean tech giant had demanded that the Chinese display panel maker pay around 100 billion won in royalty payment if they want to advertise that they are supplying their liquid crystal display (LCD) panels to Samsung, the world’s largest TV manufacturer.

BOE had refused to pay and Samsung had subsequently begun buying fewer panels from the company, sources said.

In the TV industry, end product makers like Samsung and suppliers like BOE use a variety of methods to decide who burdens the cost.

For example, if Samsung shoulders the cost to sell its TVs on Best Buy, it can lower the price it pays to panel makers. In turn, if the panel maker decides to burden the cost for the right to sell the TV on Best Buy, if can maintain the unit prices of the panels it sells to TV makers like Samsung. The overall cost may be similar between either arrangement, and the details of each arrangement may vary.

Samsung, using its position as the world’s largest TV manufacturer, uses a variety of methods to reduce that overall cost.

Its royalty payment request to BOE was likely one such method to reduce its cost, sources said.

The pair had negotiated on the royalty payment amount during the first half but the talks failed, the sources said.

Meanwhile, Samsung had told its panel suppliers that it plans to halt the purchase of additional panels until the end of the month.

This was because of the low demand for TVs currently caused by the economic downturn, Russia’s invasion of Ukraine and China’s pandemic lockdown measures.

TCL chairman Li Dongsheng is expected to visit Samsung next week to secure LCD TV panel orders for subsidiary CSOT.