Brain Drain To China Threatening South Korea’s Leadership In OLED Market

Attempts to take the OLED technology of LG Display and Samsung Display to China are continuing, causing concerns that the South Korean companies may repeat the same mistake as they did earlier with regard to LCD. At present, Chinese OLED manufacturers are about three years behind the South Korean companies. However, the gap can be narrowed rapidly due to China’s massive investment and technology leaks.
According to the Korea Information Society Development Institute (KISDI), South Korea’s share in the global OLED panel market is estimated to fall from 90 percent last year to 34 percent in 2022 due to the rise of Chinese companies, including BOE, the largest display manufacturer in China, Tianma and CSOT. They are planning to boost their OLED panel manufacturing capacity this year based on investment in sixth-generation OLED facilities.

The Chinese companies’ investment is likely to be concentrated on smartphone displays and their global market share in terms of manufacturing capacity is estimated to reach 34 percent in 2022. BOE’s share is forecast to rise to 15 percent that year to be second only to Samsung Display. Those of Tianma and CSOT are predicted to reach 5 percent to 6 percent as well.

According to industry sources, approximately 100 South Korean engineers are currently working at BOE’s plastic OLED manufacturing plant in Chengdu. In addition, CSOT began to recruit South Korean engineers last year. BOE even set up Chengdu COE Technology, a subsidiary company, for OLED engineer employment from Samsung Display.

Back in 2002, BOE took over Hydis, which was the LCD business unit of Hynix. Several years later, BOE disposed of the company after taking its technology. Now, BOE is the largest player in the global LCD market. The same thing can occur in the OLED market.

Furthermore, Chinese companies are currently boosting their facility investment with government backing. With technological gaps narrowing and cost competitiveness becoming increasingly important, it is becoming increasingly difficult for South Korean companies to remain ahead of their Chinese counterparts, who are benefitting from government subsidies and intangible support. BOE recently lowered the price of its panels by about 20 percent to rapidly increase its global market share. China is going to invest approximately 20 trillion won in LCD manufacturing facilities until 2020.

China’s LCD manufacturing capacity already exceeded that of South Korea. According to market research firm IHS Markit, South Korea accounted for 34.9 percent of the global LCD manufacturing capacity in 2016, larger than China’s 28.9 percent, but the figures were 30 percent vs. 34.1 percent last year and the gap is likely to further widen this year.― Business Korea

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