On January 3, the South Korean government raised the tax credit rate for investment in national strategic industries to a maximum of 35%, Korean media reported. The Korean display industry welcomed the announcement, adding that the Korean Display industry is expected to invest in the world's first eighth generation OLED for IT use ahead of schedule.
According to the report, the plan includes a 15 percent tax reduction for mid-sized companies and a 25 percent tax reduction for small and medium-sized companies. In consideration of an additional 10 percent tax deduction for increased investment in strategic national technology facilities this year, up to 25 percent tax reduction will be applied to large and medium-sized companies and up to 35 percent to small and medium-sized companies.
The display industry, which is listed as a national strategic technology, has recently been changed due to the government's proposal for additional tax credits. The Korea Display Industry Association said, It is very welcome that the Korean display industry has announced an unprecedented investment support policy 20 years after the government supported Korea to become the world's largest display market in 2004, and amid fierce competition.
Korea's display industry, which had held the top spot for 10 years, lost the top spot in global sales to China last year, and the technology sector is under threat. In the organic light-emitting diode (OLED) industry, which is known as the "future display technology," Samsung's dominance in the small-size OLED market, which is represented by Apple's iPhone, has been broken. In the large-size OLED market, led by LG Display, demand for TVS has plummeted due to the combination of global inflation and the economic downturn.
In response, the industry predicts that the tax rate increase will accelerate new investment decisions, including the world's first IT 8th-generation OLED project, which panel companies are currently discussing. In August last year, Samsung Display President Choi Ju-sun said at IMID 2022, "We will invest in an OLED production line for the eighth generation of IT in 2024. The base size of the 8th generation (2200 x 2500mm) is larger than that of the 6th generation (1500 x 1850mm), allowing more panels to be made at one time. In other words, the production time is shorter and the cost is lower.
Chung Ho-young, president of LG Display, also hinted at the possibility of new investment in IT OLeds by saying, "Large-size OLeds are compatible with IT panels," at the K-Display 2022 event held at the same time. LG Display announced last year that it would invest 3.3 trillion won to expand its production line in order to strengthen its small and medium-sized OLED business, which is relatively weak.
In addition to the plan, the display industry has yet to pass the national strategic technology legislation process, the report said. Last month, the South Korean government released its "Economic Policy Direction for 2023," which includes "promoting investment and regulatory innovation" and including displays as a national strategic technology, along with semiconductors, batteries and vaccines. It is analyzed that only by passing the legislation and supporting measures as soon as possible can companies focus on the OLED business. "We demand that the legislative process to include display as a national strategic technology be pushed forward as soon as possible to support rapid investment by companies," the display association stressed.
