Mother & Child Reunion – Samsung & Samsung
It is a bit unusual when the subsidiary of a large corporation goes in a direction not supported by the parent, but such has been the case, at least to a degree, between Samsung Electronics (005930.KS), the parent, and Samsung Display (pvt), the subsidiary. As Samsung Electronics was the biggest customer of Samsung Display’s large panel LCD business, SDC’s desire to end all large panel LCD production pushed Samsung Electronics to expand both their OEM development programs and find large panel LCD capacity elsewhere, and the closing and/or refitting some of SDC’s large panel fabs helped to tighten the large panel market, even before COVID-19. SDC’s program to develop a combination OLED/quantum dot technology as a progression from generic LCD also did not sit well with Samsung, with rumors that Samsung Electronics was not interested in using the technology.
That all seems to have changed as an agreement between Samsung Electronics and Samsung Display is said to have recently been made where Samsung Electronics will adopt the OLED/QD technology next year and SDC will continue to supply large panel LCD capacity to its parent through the end of this year. There has been some speculation as to such when SDC decided to halt its large panel fab closure plans with no timeframe given, as panel prices continue to rise the odds have been leaning to a longer extension rather than a shorter one.
SDC has agreed to sell its Suzhou, China large panel LCD fab to TCL (000100.CH), which was to close on January 1, but was extended to Match 31 as technology reviews by both governments have taken longer than expected, but will continue production at the remainder of its large panel fabs in Korea, with the exception of the L8-1 fab in Asan, which it has converted to OLED/QD production. That project, which has been sampling product to its parent and outside customers since the end of last year, will be the SDC’s first production line for either OLED/QD or a variant using nanorods made of GaN and quantum dots. While production would be relatively limited this year at a maximum capacity of 30,000 sheets/month when fully built-out, SDC has the option of converting other large panel capacity if needed, although much will depend on the cost of the process.
While there had been little indication that Samsung Electronics had changed its mind about using SDC’s new technology, we expect SDC’s alternative (nanorod) process might have made enough of a difference to convince parent Samsung to adopt the technology, although that could also be a function of the agreement to continue large panel LCD supply. Either way, it stabilizes the next few quarters for Samsung Display, as they will continue to maintain a profitable large panel LCD production business while developing new technology that will likely provide little financial support. Samsung Electronics will see less need for outside large panel sourcing, which would likely be a disappointment for other panel producers who might have moved up in the Samsung supply chain, and the overall industry’s capacity will be higher this year than originally expected, assuming SDC’s closings, which could help to slow upward large panel pricing pressure as the year develops.
That all seems to have changed as an agreement between Samsung Electronics and Samsung Display is said to have recently been made where Samsung Electronics will adopt the OLED/QD technology next year and SDC will continue to supply large panel LCD capacity to its parent through the end of this year. There has been some speculation as to such when SDC decided to halt its large panel fab closure plans with no timeframe given, as panel prices continue to rise the odds have been leaning to a longer extension rather than a shorter one.
SDC has agreed to sell its Suzhou, China large panel LCD fab to TCL (000100.CH), which was to close on January 1, but was extended to Match 31 as technology reviews by both governments have taken longer than expected, but will continue production at the remainder of its large panel fabs in Korea, with the exception of the L8-1 fab in Asan, which it has converted to OLED/QD production. That project, which has been sampling product to its parent and outside customers since the end of last year, will be the SDC’s first production line for either OLED/QD or a variant using nanorods made of GaN and quantum dots. While production would be relatively limited this year at a maximum capacity of 30,000 sheets/month when fully built-out, SDC has the option of converting other large panel capacity if needed, although much will depend on the cost of the process.
While there had been little indication that Samsung Electronics had changed its mind about using SDC’s new technology, we expect SDC’s alternative (nanorod) process might have made enough of a difference to convince parent Samsung to adopt the technology, although that could also be a function of the agreement to continue large panel LCD supply. Either way, it stabilizes the next few quarters for Samsung Display, as they will continue to maintain a profitable large panel LCD production business while developing new technology that will likely provide little financial support. Samsung Electronics will see less need for outside large panel sourcing, which would likely be a disappointment for other panel producers who might have moved up in the Samsung supply chain, and the overall industry’s capacity will be higher this year than originally expected, assuming SDC’s closings, which could help to slow upward large panel pricing pressure as the year develops.
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