Connect with us

International Circuit

Samsung delays LCD withdrawal until 2022 due to pandemic demand

Samsung Electronics intends to manufacture liquid crystal display panels through the end of 2022, reversing plans to end production due to an unexpected spike in demand.

But the change in plan also highlights Samsung’s difficulty in developing next-generation displays, and the tech giant’s outlook after the pandemic-driven demand fizzles remains uncertain. Compatriot and rival LG Display has also postponed plans to end production of LCD panels.

Samsung Display told employees at the end of May that it looks to continue LCD production through 2022, according to a source. The South Korean company apparently wrapped up talks on long-term purchases with parts suppliers, including U.S.-based glass substrate manufacturer Corning. Samsung Display also has relayed the plans to a wide range of business partners.

The extension affects the Asan plant in South Korea. Of the two buildings that produce large displays there, the manufacturing line using the 8.5-generation mother glass measuring 220 cm by 250 cm will keep humming. This line can produce the equivalent of displays for 1.2 million units of 55-inch TVs per month.

Samsung said in March 2020 it would cease LCD panel production by the end of that year, focusing instead on organic light-emitting diode (OLED) panels for smartphones and next-generation displays for televisions.

The company did not know that demand for personal computers was about to soar as remote work took hold amid the coronavirus pandemic. People facing lockdowns also rushed to buy new TVs. Panel supplies dwindled, and this encouraged Samsung to continue making displays into 2021.

The story is the same for LG Display. The LG group member said in January 2020 that it would stop making LCD panels for televisions in South Korea by year-end, only to decide last month to continue production. The company has told suppliers that production at its Paju plant will keep going in 2022.

The decision to continue LCD production represents a mixed bag for Samsung.

The spike in demand and the resulting price surge were a pleasant surprise. Samsung and LG Display both had finished depreciation of their aging facilities, so they can pocket income by continuing to use such equipment.

“We’ll keep going as long as we have customer needs,” an official at LG Display said.

The chip shortage that intensified this year posed a threat to Chinese and Taiwanese display makers. Contract manufacturers gave priority to chips for automobiles and put low-margin semiconductors for controlling LCD displays on the back burner. But all Samsung had to do was tap the chip unit within the group.

Display prices are skyrocketing. In May, 55-inch open cell panels — those without backlights — sold for around $225 apiece to big buyers, more than double the $106 from a year earlier for a 12th straight month of increases. The price increase is unprecedented, said David Hsieh, senior director at U.K. research firm Omdia.

Prices slid for about three years preceding the exit announcements by Samsung and LG Display in 2020, declines due partly to a supply glut caused by Chinese companies.

But Samsung’s decision to extend production also suggests the company is not progressing as planned with development of next-generation displays, which were to be mass-produced at the Asan plant.

The company unveiled mass production plans in October 2019 for quantum dot OLED panels, and also has been working on micro LED and other technologies. But Samsung has fallen behind initial plans in devising a mass production process. With the pricing edge for LCD panels, the tech group apparently thinks continuing output is more advantageous, especially from the perspective of maintaining jobs.

Samsung, which commands a world-leading market share of 32% in TVs sold with annual sales of over 70 million units, also buys displays from external suppliers such as China Star Optoelectronics Technology, Chinese player BOE and Taiwan’s Innolux.

A tight supply means higher prices for panels, which would eat into the competitiveness of the final product, so Samsung has good reason to keep making TV displays. The emergence of risks associated with buying parts from China also likely made the South Korean company think twice about ending its own output.

Still, the surge in display prices may not last.

“Demand is starting to soften, and supply may begin to overwhelm demand in the second half of this year,” said Yoshio Tamura, president of Asian operations at U.S.-based research firm DSCC. Nikkei Asia

Click to comment

Notice: Undefined variable: user_ID in /home/cloudpanel/htdocs/www.tvj.co.in/wp-content/themes/zox-news/comments.php on line 49

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2021 TV Veopar Journal

error: Content is protected !!