Skyworth lowers price of 55” OLED TV in China
Skyworth (751.HK) has lowered the price of its 55” OLED TV by over 20% to $1593 as of this week. Current pricing is lower than typical LG 55” OLED TVs in the US, which are $1999, with a few on-line retailers offering as low as $1599. While we cannot be sure that the model being offered is the correct one, Skyworth announced back in November ’16, that it intends to use OLED panels developed by BOE in their OLED TV offerings, and while BOE is still in very limited production, a price decrease could indicate that they have switched from LG Display (LPL) to BOE for their 55” OLED panels, or that BOE has seen improving yields at its Hefei OLED pilot line.
LG Display will still hold a very commanding lead in the OLED TV panel production market, likely over 90% this year, but should BOE gain some traction with local TV brands, it will change the pricing situation for and put outside pressure on LGD’s OLED panel pricing. We note that while OLED material supplier Universal Display (OLED) will reap the benefits of any capacity increases in OLED TV manufacturing, and it already counts BOE as a customer, UDC derives royalty income from LG Display based on the price sold to customers (primarily LG Electronics (066570.KS)). This means the balance between higher unit volumes and lower unit pricing could become a significant variable in UDC’s royalty income line. Samsung Display’s (pvt) agreement with UDC is not based on price, but reflects a previously agreed on yearly license fee that escalates each year.
LG Display will still hold a very commanding lead in the OLED TV panel production market, likely over 90% this year, but should BOE gain some traction with local TV brands, it will change the pricing situation for and put outside pressure on LGD’s OLED panel pricing. We note that while OLED material supplier Universal Display (OLED) will reap the benefits of any capacity increases in OLED TV manufacturing, and it already counts BOE as a customer, UDC derives royalty income from LG Display based on the price sold to customers (primarily LG Electronics (066570.KS)). This means the balance between higher unit volumes and lower unit pricing could become a significant variable in UDC’s royalty income line. Samsung Display’s (pvt) agreement with UDC is not based on price, but reflects a previously agreed on yearly license fee that escalates each year.
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