Samsung Display Winds Down Large Panel Business
Samsung Display (pvt), an affiliate of Samsung Electronics, was once the large producer of LCD display panels[1], then competing with South Korean rival LG Display (LPL) for supremacy in that market. While much of SDC’s revenue came from its parent, Samsung Display was a major global large panel LCD supplier to the industry. But as can be seen in Figure 1, SDC’s focus moved away from large panel LCD display production and more toward higher value small panel OLED displays, where the company still dominates.
In 2020 the company made a formal decision to end its large panel LCD production business by the end of that year, and sold its Gen 8.5 fab in Suzhou, China to Chinastar (pvt), while taking a 12% stake in the company, but postponed the closing of large panel LCD production facilities in South Korea at the behest of parent Samsung Electronics. While sustaining a single large panel LCD fab during 2021as panel prices increased, SDC maintained it goal of exits the large panel LCD display business but used existing fab infrastructure to add small panel OLED capacity or to develop a production line for its proprietary QD/OLED panel process, which has begun production.
As large panel LCD prices began to decline last July, it became inevitable that SDC would finalize its plans and close that fab, although the moratorium was extended into this year. As large panel LCD prices continue to decline it becomes more critical for SDC to close their last large panel fab as panel prices approach cash costs, which is the case currently, and sales for SDC’s large panel LCD segment declined to only $7m in April, down from $65m in January and a peak of 2.13b in March of 2012. Given the declining panel price and the reduced production assumed, we would expect the fab to be closed by the end of 2Q.
According to local Korean press, Samsung Display employees (at least those 37 years old or less) can apply to be transferred to the chip packaging business of parent Samsung Electronics, which operates under a different division. 300 such positions are being offered to the ~1,000 SDC employees still working at the L8 LCD fab, which will take some time to wind down. Staff will be needed to secure the equipment, which could be sold to smaller producers, with some potentially held until SDC decides what it will do with the idle space.
SDC has been developing plans to produce Gen 8 OLED panels using a vertical deposition process that would allow for RGB patterning rather than the WOLED process used by LG Display, or the fab can be converted to additional capacity for the QD/OLED process, which currently stands at 30,000 Gen 8.5 sheets/year, a relatively small production volume level, but we expect plans to be finalized for the fab in July if it goes toward QD/OLED, as that conversion would likely take 9 to 12 months, giving SDC enough time to increase QD/OLED production for the 2023 holiday season, although that is a bit speculative on our part. All in, SDC should be out of the large panel LCD business within the next 30 to 45 days.
[1] By Sales
In 2020 the company made a formal decision to end its large panel LCD production business by the end of that year, and sold its Gen 8.5 fab in Suzhou, China to Chinastar (pvt), while taking a 12% stake in the company, but postponed the closing of large panel LCD production facilities in South Korea at the behest of parent Samsung Electronics. While sustaining a single large panel LCD fab during 2021as panel prices increased, SDC maintained it goal of exits the large panel LCD display business but used existing fab infrastructure to add small panel OLED capacity or to develop a production line for its proprietary QD/OLED panel process, which has begun production.
As large panel LCD prices began to decline last July, it became inevitable that SDC would finalize its plans and close that fab, although the moratorium was extended into this year. As large panel LCD prices continue to decline it becomes more critical for SDC to close their last large panel fab as panel prices approach cash costs, which is the case currently, and sales for SDC’s large panel LCD segment declined to only $7m in April, down from $65m in January and a peak of 2.13b in March of 2012. Given the declining panel price and the reduced production assumed, we would expect the fab to be closed by the end of 2Q.
According to local Korean press, Samsung Display employees (at least those 37 years old or less) can apply to be transferred to the chip packaging business of parent Samsung Electronics, which operates under a different division. 300 such positions are being offered to the ~1,000 SDC employees still working at the L8 LCD fab, which will take some time to wind down. Staff will be needed to secure the equipment, which could be sold to smaller producers, with some potentially held until SDC decides what it will do with the idle space.
SDC has been developing plans to produce Gen 8 OLED panels using a vertical deposition process that would allow for RGB patterning rather than the WOLED process used by LG Display, or the fab can be converted to additional capacity for the QD/OLED process, which currently stands at 30,000 Gen 8.5 sheets/year, a relatively small production volume level, but we expect plans to be finalized for the fab in July if it goes toward QD/OLED, as that conversion would likely take 9 to 12 months, giving SDC enough time to increase QD/OLED production for the 2023 holiday season, although that is a bit speculative on our part. All in, SDC should be out of the large panel LCD business within the next 30 to 45 days.
[1] By Sales
Samsung Display Large Panel Monthly Revenue Comparison - Source: SCMR LLC, OMDIA, DisplaySearch
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