More on Chinastar OLED & Samsung
Yesterday we indicated that Chinastar (pvt), a subsidiary of TCL, has been rumored to be supplying small panel OLED displays to Samsung Electronics, the parent of Samsung Display (pvt), who has been the exclusive supplier to Samsung in the past. We believe that Chinastar has supplied a small number of OLED panels used for the Galaxy M smartphones sold in India, with Samsung likely using those displays to evaluate Chinastar’s capabilities as a larger supplier, similar to the way that Apple (AAPL) has been testing BOE’s (200725.CH) ability to enter its OLED supply chain.
While much will be made of the fact that Chinastar has supplied OLED displays to Samsung Electronics, we expect, as we noted yesterday, that Samsung will proceed rather slowly with Chinastar to limit the exposure to potential early production problems and potential delivery delays. Credit is due to Chinastar for meeting Samsung’s specifications but thus far no supplier other than Samsung Display has been allowed to produce OLED displays for Samsung’s flagship lines, so the mainstay of the Samsung parent/child relationship is still intact, but while Samsung Electronics continues to push small panel OLED down the smartphone product line, they face competition from state funded Chinese OLED suppliers, who push Samsung to lower costs.
If Samsung Display is unable to or does not want to compete with Chinese small panel OLED producers for Samsung’s low-priced smartphone products, the door will remain open to other suppliers like Chinastar. Does it mean that the end is near for Samsung Display’s dominance of the small panel OLED market? Not likely as SDC has the expertise to not only produce displays to Samsung’s flagship phone specifications, but has created and helped Samsung Electronics promote the flexible display business. SDC’s ability to maintain a substantial lead in that business continues to separate them from other small panel OLED producers and gives them the option of walking away from what is likely low margin business, even if it is from its parent. Of course also having Apple as a large customer (shared with LG Display (LPL)) doesn’t hurt either.
While much will be made of the fact that Chinastar has supplied OLED displays to Samsung Electronics, we expect, as we noted yesterday, that Samsung will proceed rather slowly with Chinastar to limit the exposure to potential early production problems and potential delivery delays. Credit is due to Chinastar for meeting Samsung’s specifications but thus far no supplier other than Samsung Display has been allowed to produce OLED displays for Samsung’s flagship lines, so the mainstay of the Samsung parent/child relationship is still intact, but while Samsung Electronics continues to push small panel OLED down the smartphone product line, they face competition from state funded Chinese OLED suppliers, who push Samsung to lower costs.
If Samsung Display is unable to or does not want to compete with Chinese small panel OLED producers for Samsung’s low-priced smartphone products, the door will remain open to other suppliers like Chinastar. Does it mean that the end is near for Samsung Display’s dominance of the small panel OLED market? Not likely as SDC has the expertise to not only produce displays to Samsung’s flagship phone specifications, but has created and helped Samsung Electronics promote the flexible display business. SDC’s ability to maintain a substantial lead in that business continues to separate them from other small panel OLED producers and gives them the option of walking away from what is likely low margin business, even if it is from its parent. Of course also having Apple as a large customer (shared with LG Display (LPL)) doesn’t hurt either.
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