In the Pocket
The US National Defense Authorization Act (H.R. 3838 -119th Congress) is a massive appropriations bill that sets policies and authorizations for fiscal 2026 for the DOD, security programs for the Department of Energy and the Maritime Administration, and authorizes appropriations for the Defense Nuclear Facilities Safety Board and the Naval Petroleum Reserves. Most importantly here, it modulates the US defense acquisition system to expedite the delivery of capabilities and materials to our Armed Forces. The House of Representatives recently passed an amendment to this vast appropriations bill that could have relevance to the CE space.
While the final wording has yet to be published, what we have seen indicates that the bill could bar the Armed Forces from purchasing displays, particularly ‘advanced displays’, such as OLED or more specialized display modalities, if they are backed by the Chinese or Russian government. Again the exact wording is important and yet to be revealed, but that could easily mean that any Chinese display producer that is receiving government subsidies could be considered to be ‘supported’ by the Chinese government and banned, and we believe all Chinese panel producers receive at least some government subsidies.
Using this amendment, the government could ban all display purchases from Chinese panel producers, giving an advantage to Samsung Display (pvt), LG Display (LPL), both based in South Korea, Sharp (6753.JP), based in Japan, and AU Optronics (2409.TT) and Innolux (3481.TT), both based in Taiwan, along with a number of small panel producers outside of China. More specifically, relating to OLED, the amendment would allow the US to ban both large and small OLED displays from all six Chinese OLED producers. While the DOD categorizes display purchases by program, making it difficult to get a total display spending budget for a particular year, estimates for this year are substantially over $1b. Whether the US government will choose to use this amendment as a bargaining chip in its ongoing trade negotiations with China is yet unknown, but they have it in their pocket if the need it.
While the final wording has yet to be published, what we have seen indicates that the bill could bar the Armed Forces from purchasing displays, particularly ‘advanced displays’, such as OLED or more specialized display modalities, if they are backed by the Chinese or Russian government. Again the exact wording is important and yet to be revealed, but that could easily mean that any Chinese display producer that is receiving government subsidies could be considered to be ‘supported’ by the Chinese government and banned, and we believe all Chinese panel producers receive at least some government subsidies.
Using this amendment, the government could ban all display purchases from Chinese panel producers, giving an advantage to Samsung Display (pvt), LG Display (LPL), both based in South Korea, Sharp (6753.JP), based in Japan, and AU Optronics (2409.TT) and Innolux (3481.TT), both based in Taiwan, along with a number of small panel producers outside of China. More specifically, relating to OLED, the amendment would allow the US to ban both large and small OLED displays from all six Chinese OLED producers. While the DOD categorizes display purchases by program, making it difficult to get a total display spending budget for a particular year, estimates for this year are substantially over $1b. Whether the US government will choose to use this amendment as a bargaining chip in its ongoing trade negotiations with China is yet unknown, but they have it in their pocket if the need it.
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