Samsung Display Sells LCD IP to Chinastar
Samsung Display (pvt), an affiliate of Samsung Electronics (005930.KS), and the world’s largest producer of small panel OLED, has sold roughly 2,000 patents to Chinastar (pvt) a subsidiary of China’s TCL (000100.CH), a company in which Samsung has a 12.3% stake. That stake was acquired as part of the 8/31/20 sale of its 60% stake in its Gen 8.5 LCD fab in Suzhou to Chinastar for $1.08b US. In the patent package were 577 US patents owned by Samsung Display and to put that number in perspective Samsung Display has 18,860 US patents and 3,968 US patent applications, with 325 applications and 1,731 with “Liquid Crystal Display” in the title. The price of the sale, which could have been done piecemeal, was not disclosed, although it will eventually show up in SDC’s financials, and given the company’s new revelation as to compensating those who were responsible for the IP when it is monetized, more detail will eventually show up in the footnotes.
As Samsung Display made the decision to end the production of large panel LCD displays back in 2020 and has slowly sold or shuttered all of its large panel LCD fabs, selling line equipment and converting some to small and potentially large panel OLED production, along with the company’s OLED derivative. QD/OLED, monetizing these IP assets are a logical path for SDC. TCL/Chinastar will now have a broader IP platform under which it can more conclusively defend itself during IP litigation, while typical agreements call for the previous patent owner to be grandfathered against new litigation.
The question however, is whether Chinastar will use the extended portfolio against Chinese rival BOE (200725.CH), the largest panel producer in China, as a tool to limit BOE’s competitive ability, a practice relatively common in the display space and certainly in the CE space, and one that gains momentum as the financials of panel producers deteriorate. The problem here would be that litigation against BOE by Chinastar could be taken as a tacit challenge from Samsung Display and potentially from Samsung Electronics, who purchases large panel LCD product from both Chinastar and BOE, given the links back to both Samsung entities. For now things are quiet, but we expect TCL’s lawyers are review all of the new IP to see if it pertains to existing litigation and whether it can generate new legal challenges going forward.
As Samsung Display made the decision to end the production of large panel LCD displays back in 2020 and has slowly sold or shuttered all of its large panel LCD fabs, selling line equipment and converting some to small and potentially large panel OLED production, along with the company’s OLED derivative. QD/OLED, monetizing these IP assets are a logical path for SDC. TCL/Chinastar will now have a broader IP platform under which it can more conclusively defend itself during IP litigation, while typical agreements call for the previous patent owner to be grandfathered against new litigation.
The question however, is whether Chinastar will use the extended portfolio against Chinese rival BOE (200725.CH), the largest panel producer in China, as a tool to limit BOE’s competitive ability, a practice relatively common in the display space and certainly in the CE space, and one that gains momentum as the financials of panel producers deteriorate. The problem here would be that litigation against BOE by Chinastar could be taken as a tacit challenge from Samsung Display and potentially from Samsung Electronics, who purchases large panel LCD product from both Chinastar and BOE, given the links back to both Samsung entities. For now things are quiet, but we expect TCL’s lawyers are review all of the new IP to see if it pertains to existing litigation and whether it can generate new legal challenges going forward.
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