Chinese display panel makers monopolizing the liquid crystal display (LCD) market will in the long run threaten the TV businesses of Samsung and LG, according to UBI Research CEO Choong Hoon Yi.
Yi told TheElec in an interview on Tuesday that while many see the dominance of Chinese companies in the LCD space as a threat to South Korea’s display panel businesses, the bigger threat was to the set makers.
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.
Samsung Display exited its LCD business last year while LG Display halted LCD production in South Korea but is continuing to do so in Guangzhou, China. However, LG Display’s Chinese facility has halved its production capacity and is expected to be sold in the long run.
Yi claimed there was a plan by the Chinese government to merge its display market into three companies and there are signs that this plan is accelerating.
HKC will merge with IVO, while in the OLED space, BOE’s OLED business can merge with Visionox and be spun off, the CEO said.
COST’s T4 factory and EDO’s Shanghai factory could also be turned over to Tianma, allowing it to become the sole automotive OLED display panel supplier in China, Yi added.
A government-led merger like this will allow the remaining display panel makers to fix their prices and turn to profitability.
China’s central government and those of the provinces hold stakes in local display panel makers and have a huge influence on their affairs, the CEO noted.
These dominant display panel makers will make it difficult for Samsung Electronics and LG Electronics to procure sufficient TV panels, Yi said.
For example, the Chinese display panels could lower Samsung’s TV shipment below 40 million units a year, he said.
At the same time, Samsung’s Chinese rivals in TV such as TCL and Hisense can increase their shipment to 30 million each.
China has a huge local market for TVs and Chinese TV makers are offering ever more competent products, Yi said.
This means Chinese display panel makers can sell their panels to local TV customers at a cheaper price but increase the price for foreign buyers such as Samsung, damaging their competence.
While Samsung and LG will continue to post higher revenues than their Chinese counterpart thanks to their control over the high-end TV market, their volume shares may be threatened this way, Yi added.
Meanwhile, LG Display was in talks with CSOT to sell its Guangzhou factory, the CEO added.