News that Samsung will indefinitely extend its plan to shut down its LCD plants this year has turned the tables on plans to shut down its major LCD plants.
The main reason for the turning point is that the LCD market price has changed significantly recently, with a price increase of about 60% in half a year. After Samsung saw the LCD market was "profitable", it spared no efforts to "hit its face" and postponed the original plant closure plan indefinitely, which will change the market pattern once again.
The main reason for indefinite postponement
As Samsung, LG and other large display manufacturers have announced that they will stop the supply of LCD panels, resulting in a tight upstream supply chain, LCD panel market continues to rise, the price continues to rise. In the third quarter of this year alone, LCD panel prices rose by 30%, which is the main reason why Samsung announced the plant delay.
Wit at the same time Display, chief analyst at Luffy Lin pointed out that "at present, the LCD panel prices to remain high in, but also the trend of rising, samsung electronics have to purchase from other panel makers, and the price next year LCD panel, the samsung LCD panel Display delay production time, samsung electronics reimbursement can underwrite samsung Display LCD panel production next year, to ease some samsung purchasing the pressure of the liquid crystal panel."
The one-time LCD hegemon delisted
In the LCD panel market, Samsung can claim dominance. Samsung rose from the period of monopoly of Japanese enterprises. In the 1990s, unwilling to be dominated by Japanese enterprises in the display industry, Samsung developed its LCD business at the cost of seven consecutive years of losses, and finally reached the world's first LCD panel shipments in 1998.
Since then, it has started the world's first 7th generation LCD production line, developed the world's first 120Hz 70-inch full HD LCD panel, mass-produced the world's first 22-inch transparent LCD screen, and developed the world's first 55-inch curved LCD screen, etc., firmly sitting in the dominant position of the LCD industry. However, on March 31, Samsung Display announced that it would terminate all LCD products by the end of this year to accelerate the development of the QD Display project.
Samsung display large department minister said Cui Zhou good career, "the momentous changes in the business strategy matters, because the LCD market severe recession in recent years, large sector business produce a massive deficit, the management in order to get rid of the crisis, as well as to improve the competitive power of the large enterprise from QD display investment formally started in October last year. The company has decided to terminate all LCD product supply by the end of December 2020 in order to accelerate the transition to QD Display."
New technologies of OLED and MICROLED are coming
In addition to the division deficit, the arrival of new technologies such as OLED and MicroLED is also a major reason for Samsung's decision to exit the LCD market.
At present, OLED occupies an absolute position in the smart phone market. Except for Apple and some low-end models of brands, OLED is adopted as the screen choice for smart phones. The main battlegrounds for LCD panels, TVs, laptops and tablets, are also saturated. Global shipments of large-size LCD panels will decline at a negative compound annual growth rate of 0.8% from 2020 to 2024, Digitimes predicts.
Samsung has announced an indefinite postponement of plans to shut down its LCD factory
Photo Source: OFweek
This proves that the LCD market is in its twilight, and Samsung, the leading company in the display industry, does not want to pay much attention to it. Instead, it plans to focus on more competitive technology development.
In 2019, Samsung said it spent more than 13 trillion won on equipment and research and development, mainly to upgrade its production lines. Samsung also has a clear lead in The current most advanced MicroLED technology. As early as CES 2018, Samsung showed off The Wall TV using MicroLED technology, which is The next development trend in The replacement of OLED.
Domestic display manufacturers such as BOE rise
In recent years, in the LED market, Chinese manufacturers also gradually have a name, began to make a figure. As a representative of domestic screen manufacturers, BOE has been developing rapidly in recent years. By the end of 2017, BOE's shipments reached 25% of the global market share, ranking first in the world. And in the market segment, BOE in laptop computer display, tablet computer display, smart phone screen, monitor display four fields share also ranks first.
At present, the production capacity of domestic manufacturers accounts for 44.8%. Enterprises led by BOE have also launched the super-large 10.5 generation production, and other domestic manufacturers have also added 8.6 generation production lines and 11 generation production lines. This is also the reason why the current LCD panel market is saturated.
In addition to the production increase, due to the fierce competition in the domestic market, domestic manufacturers have launched a price war mode, which leads to a sharp drop in LCD panel prices and consequently lower profits. Samsung and other international front-line manufacturers have withdrawn from the circuit and turned to high-end circuits such as OLED and MicroLED.
Samsung then sold the Suzhou LCD plant, and TCL's display unit, China Star Power Technology, acquired a 70% stake in the plant for $1 billion, with the display unit holding 60% and TCL 10 percent. At the same time, as early as last year, Samsung's two LCD production lines in South Korea began to reduce production by 40%, which is also a reflection of Samsung's determination to exit the LCD market.
Coincidentally, Panasonic, LG have withdrawn from the LCD market
In November 2019, Japanese media said that Panasonic announced that it would withdraw from the LCD panel business and would terminate production in 2021. Panasonic set up its PLD unit in 2010 to focus on the TV panel market, but in 2016 it moved into the automotive and industrial sectors due to intense competition. However, still can not withstand the market pressure, in 2019 announced the end of the liquid crystal plate business.
Panasonic said that after withdrawing from the LCD business will continue to focus on B2B business, equipment will continue in the vehicle and industrial areas, mainly research CASE, communication and intelligence.
And in January LG Display, another LCD maker, announced that it would stop domestic production of LCD TV panels in South Korea by the end of this year because of falling LCD prices and a global supply glut.
In fact, LG began cutting costs even before the announcement, with LG Display saying in October that it planned to "scale back" its two LCD TV panel production lines in South Korea and was exploring options. However, in the first two months, LG also took a look at the current LCD market price dividend, announced the suspension plan extension.
The deeper meaning of indefinite postponement
As early as last year, Samsung decided that the LCD market's thin margins were not enough to support its current production lines, and began to lay out plans to delist. Not only to reduce production, sell factories and other strategies, in this year's new TV also used AU, Innolux and other brands of panels, did not suffer any impact of the production halt.
In addition, Samsung has long been looking for a way out, previously said that after the closure of the factory, all of the future screen procurement from Sharp, Sharp will also become the sole supplier of Samsung LCD panels. Due to the LCD price war, the purchase cost is lower than the production cost, and by virtue of Samsung's own leading display technology, the screen can be adjusted to a better state, which not only guarantees the cost profit space, but also does not damage the brand image, so as to achieve the best of both worlds.
The smartest part of Samsung's production halt is to put its manpower and resources into OLED and MicroLED panels with better prospects in the future to further consolidate its leading position in the new technology. And this indefinite delay is just a small episode, Samsung just take this price increase dividend, does not mean that Samsung will return to the LCD track, just postpone the production plan, wait until next year the market slows down, will be Samsung really quit the track moment.
