LG Display says supplying TV panels to Samsung by July should not be problem
As we have noted in the past, the new management of Sharp has decided to focus on bringing back the Sharp brand, and as such has reduced TV panel output to outside customers, particularly Samsung (005930.KS), Hisense (600060.CH) and Sony (SNE). While business makes strange bedfellows, Samsung and LG Display, normally bitter rivals, seem to have agreed on a supply agreement that has been rumored for some time. We believe that the CEO of LG Display (LPL) stated yesterday that while the final details had yet to be worked out, the company expected to begin shipping panels to Samsung and Sony by July. We do not expect LGD to be the only supplier to Samsung, with smaller amounts from other suppliers who can fill specific requirements, but we expect LGD will supply the bulk of the missing displays.
While we would expect LGD to take a bit out of Samsung’s hide for filling the gap, we would also expect to see a bit less price movement in the 40” – 50” TV panel size range once Samsung is able to reconcile the supply form LGD, as we would expect their buyers have been in the market trying to grab as many compatible displays as possible, without much regard to price, and those producers able to fill such orders taking full advantage. If all goes according to the LGD plan, we would expect to see more normal TV panel pricing beginning in early summer. Of course, deals like this can go awry on a moment’s notice, and Samsung is not known for making friends with its suppliers, let alone its biggest competitor, but in this case both parties win, although LGD more so, which gives the deal a better than average chance of completion. On a longer term basis however, we would expect Samsung to either upgrade its relationships with Chinese producers China Star (pvt) and BOE (200725.CH), who can produce large panel TV displays in volume. We note that Samsung Display is a 10% owner in China Star along with TCL (000100.CH) and the local Chinese government.
While we would expect LGD to take a bit out of Samsung’s hide for filling the gap, we would also expect to see a bit less price movement in the 40” – 50” TV panel size range once Samsung is able to reconcile the supply form LGD, as we would expect their buyers have been in the market trying to grab as many compatible displays as possible, without much regard to price, and those producers able to fill such orders taking full advantage. If all goes according to the LGD plan, we would expect to see more normal TV panel pricing beginning in early summer. Of course, deals like this can go awry on a moment’s notice, and Samsung is not known for making friends with its suppliers, let alone its biggest competitor, but in this case both parties win, although LGD more so, which gives the deal a better than average chance of completion. On a longer term basis however, we would expect Samsung to either upgrade its relationships with Chinese producers China Star (pvt) and BOE (200725.CH), who can produce large panel TV displays in volume. We note that Samsung Display is a 10% owner in China Star along with TCL (000100.CH) and the local Chinese government.
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