According to a recent report by South Korean newspaper Chosun Ilbo, it has learned that Samsung Electronics is planning to install organic light-emitting diode (OLED) panels made by China's BOE and China Star Optoelectronics in its Galaxy Watch 6 (working title) and flagship smartphone to be released next year. The move is interpreted as Samsung hoping to improve its cost competitiveness by adopting relatively cheaper Chinese OLED panels. But there are concerns that Samsung's adoption of Chinese panels could hurt the market competitiveness of domestic companies.
According to the electronics industry and foreign media on Wednesday, Samsung Electronics has sent an inquiry (RFQ) to Samsung Display, Chinese companies BOE and China Star Optoelectronics for the OLED panel of the Galaxy Watch 6, which is under development and expected to be released in the second half of next year. The RFQ request includes the panel delivery price and supply quantity.
According to another industry source, Samsung is also in talks with BOE to supply OLED panels for flagship smartphones, including the Galaxy Z Fold 5, Flip 5 (working title) and Galaxy S23 (working title), which are scheduled to be released next year. This is interpreted as Samsung Electronics' intention to break the monopoly of Samsung Display, which provides display panels exclusively for its flagship smartphones.
Samsung Electronics relies on Chinese companies for most of its LCD TV panels, but does not use Chinese-made panels for its smartphones, except for the mid-to-low end Galaxy A and the Galaxy M, its strategic phone for the Indian market. Samsung is the world leader in small and medium-size OLED technology, with a market share of 71.9% as of the second quarter of this year.
However, demand for smartphones is now falling, while Chinese smartphone makers are expanding the market with the same capabilities but at lower prices, the report said. As a brand-name manufacturer, Samsung Electronics desperately needs to cut costs, and to stay competitive on price, they seem to have set their sights on panel plants in China.
In addition, recent industry evaluations say that China's OLED technology has reached a level almost similar to that of South Korean companies, which may be one reason why Samsung Electronics is considering using Chinese OLED.
China's OLED panels have long been considered low-performing due to their low prices, but BOE recently passed Apple's stringent quality checks to become the OLED panel supplier for the iPhone 14 (working title) scheduled for release this fall. As a result, the industry's evaluation of Chinese display technology has also begun to change.
Apple's Display supply line, which is not limited to Samsung Display, LG Display and others but also includes Chinese companies, is considered a strategic choice to ensure price competitiveness by diversifying its supply chain, some analysts said. Samsung Electronics is strategically trying to take advantage of the price negotiation between the Chinese company and its affiliate Samsung Display.
However, some say that if Samsung adopts Chinese OLED panels, the domestic industry's competitiveness will likely fall. Chinese display makers had an estimated 20.5 per cent market share in the second quarter of this year, according to Omdia, a market research firm. This is an increase of 2.8 percentage points from last year's annual market share of 17.7 percent and more than double the market share in three years compared to 9.7 percent in 2019. "As Chinese companies, which are dominating the LCD market, are actively developing small and medium-size OLeds, the position of Korean companies may eventually disappear." "The person said.
