The display equipment industry may face difficulties due to conservative investment and delayed production by panel makers. Some display equipment companies are reportedly seeking alternatives through business diversification or M&A.
Although display manufacturers are switching production lines from LIQUID crystal displays (LCDS) to organic light-emitting diodes (OLeds), device makers are not benefiting, industry sources said Thursday. WonikIPS 'first-quarter sales sales were down 18% year on year and operating profit was down 9% year on year. APSystem's sales fell 29 per cent year on year and operating profit fell about 6 per cent.
"Display manufacturers are having trouble supplying OLED devices." "South Korea's LGDisplay and Samsung Display are quite cautious in investing in OLED after COVID-19," said an industry source.
In addition, South Korean equipment manufacturers are deeply concerned that Chinese display manufacturers have recently delayed the termination of equipment supply contracts due to COVID-19. This means that Korean equipment makers cannot quickly reflect sales in their books or receive part of their payments, so the burden is increasing.
Invania, a display equipment manufacturer, has postponed a single sales contract worth 31.7 billion won with China Huike by seven months from July 23 to December 31. DMS, another equipment manufacturer, has postponed its contract to supply 50.2 billion won worth of equipment to China Huaxing Optoelectronics by five months from May 20 to October. This is expected to continue next year.
According to market research firm DSCC, global investment in LCD and OLED equipment is expected to reach 5.3 billion U.S. dollars next year, down 57 percent from this year. By panel, LCD and OLED are expected to drop 79 percent and 42 percent, respectively, from this year to 1.9 billion dollars and 3.4 billion dollars, respectively. Therefore, display equipment companies are seeking solutions through business diversification and mergers and acquisitions.
SFA has focused on display equipment, but it has expanded into electric vehicles, semiconductors, and distribution and logistics equipment. Kim Young-min, head of the SFA, said, As equipment companies, display companies have seen many fluctuations in their investment strategies. To overcome this, SFA is pushing to diversify into secondary batteries (batteries), semiconductors and distribution and logistics equipment.
In addition, LT, a manufacturer of display module manufacturing equipment, merged with KMac, a manufacturer of testing equipment, in July last year to provide solutions for HB.
An industry insider predicted, "It shows that the industry will improve in about three years."
