The Middle of the Road
LG Display (LPL) is the sole supplier of W-OLED displays for TVs. Not only do they assemble and sell TVs made with such displays through LG Electronics, but they sell to a variety of other TV brands, along with replacement displays to others that are not major customers. In recent weeks we have noted that China’s largest display producer BOE (200725.CH) has visited competitor Samsung Electronics for discussions concerning the potential for supply agreements. BOE is likely being optimistic about their OLED capabilities given they have a small (2,000 sheet/month) WOLED pilot line in operation, but the company was never one to be concerned about taking an aggressive stance.
This has likely been disturbing for LG Display, who supplies WOLED panels to Samsung Electronics, who assembles and sell same along with affiliate’s Samsung Display (pvt) QD/OLED TVs. LGD is expected to sell ~900,000 units to Samsung this year with the expectation of an additional 900,000 units next year with the potential for 200,000 or 300,000 more, making Samsung an important customer who has no stated intention of expanding their QD/OLED capacity or producing their own WOLED panels. The fact that BOE is speaking directly to Samsung, potentially at Samsung’s request would have to keep executives at LG Display up at night.
This has likely been disturbing for LG Display, who supplies WOLED panels to Samsung Electronics, who assembles and sell same along with affiliate’s Samsung Display (pvt) QD/OLED TVs. LGD is expected to sell ~900,000 units to Samsung this year with the expectation of an additional 900,000 units next year with the potential for 200,000 or 300,000 more, making Samsung an important customer who has no stated intention of expanding their QD/OLED capacity or producing their own WOLED panels. The fact that BOE is speaking directly to Samsung, potentially at Samsung’s request would have to keep executives at LG Display up at night.
It seems that LG Display has sent an official letter to a number of its partners requesting them to take extra precautions concerning the potential leak of information concerning WOLED technology.
"We are strengthening technology and information security due to concerns about technology leaks after recently reading an article about a competitor's W-OLED product development," and "Your company (partners) must also protect technology and strengthen information security based on mutual trust. If a competitor requests or inquiries about the development or supply of W-OLED components or technologies that you supply to us, and if the components or technologies in question were jointly developed by us and you, or if they are related to information you obtained during the collaborative process, please discuss them with us first before responding to the competitor."
LG Display no longer produces LCD TV panels and has therefore made an even greater commitment to W-OLED. With Mini-LED TVs quickly gaining share and quantum dot and Micro-LED technology on the horizon, LGD has a lot to lose if a new competitor appears. BOE is not yet ready to be such a competitor given its WOLED line capacity and yield limitations[1], but as said, BOE is an aggressive competitor, and will do almost anything to gain Samsung as a potential WOLED customer. (We note that they were discussing WOLED monitors with Samsung which are smaller, giving them ~8x the capacity). While we don’t expect any change in the near-term, and more likely Samsung is using BOE to leverage its bargaining position with LGD, LGD has a lot to lose on a longer term basis if they cannot keep BOE out of the WOLED market, and a letter to partners is probably not going to do much.
Our perception of LG Display tech executives, while more aggressive than Japanese or European tech execs, is still one that is rooted in hierarchy, deference, and the avoidance of direct confrontation, while BOE’s management seems aggressive and extremely expansionist. At this juncture, as BOE decides whether they will take the experience they have gained producing small quantities of WOLED displays, and the experience gained from building a Gen 8.6 IT OLED fab, and challenging LGD’s dominance of the WOLED market, it would serve for LGD to step outside of their lane and push back on BOE’s intentions with some non-culturally traditional behavior. South Korea lost its domination of the LCD space and is being challenged in the small panel OLED space by Chinese producers, so it is essential that the Chinese are met with every possible roadblock to make it less attractive for them to move outside of LCD production.
While a more aggressive stance might be thought of as too out-of-character for LGD executives, they seem to be at a crossroads with BOE and we expect an ‘official letter’ just incentivizes BOE to push harder. The middle of the road is not going to cut it anymore…
[1] 8,000 65” WOLED equivalents at 100% yield. More likely close to half that due to low yield.
"We are strengthening technology and information security due to concerns about technology leaks after recently reading an article about a competitor's W-OLED product development," and "Your company (partners) must also protect technology and strengthen information security based on mutual trust. If a competitor requests or inquiries about the development or supply of W-OLED components or technologies that you supply to us, and if the components or technologies in question were jointly developed by us and you, or if they are related to information you obtained during the collaborative process, please discuss them with us first before responding to the competitor."
LG Display no longer produces LCD TV panels and has therefore made an even greater commitment to W-OLED. With Mini-LED TVs quickly gaining share and quantum dot and Micro-LED technology on the horizon, LGD has a lot to lose if a new competitor appears. BOE is not yet ready to be such a competitor given its WOLED line capacity and yield limitations[1], but as said, BOE is an aggressive competitor, and will do almost anything to gain Samsung as a potential WOLED customer. (We note that they were discussing WOLED monitors with Samsung which are smaller, giving them ~8x the capacity). While we don’t expect any change in the near-term, and more likely Samsung is using BOE to leverage its bargaining position with LGD, LGD has a lot to lose on a longer term basis if they cannot keep BOE out of the WOLED market, and a letter to partners is probably not going to do much.
Our perception of LG Display tech executives, while more aggressive than Japanese or European tech execs, is still one that is rooted in hierarchy, deference, and the avoidance of direct confrontation, while BOE’s management seems aggressive and extremely expansionist. At this juncture, as BOE decides whether they will take the experience they have gained producing small quantities of WOLED displays, and the experience gained from building a Gen 8.6 IT OLED fab, and challenging LGD’s dominance of the WOLED market, it would serve for LGD to step outside of their lane and push back on BOE’s intentions with some non-culturally traditional behavior. South Korea lost its domination of the LCD space and is being challenged in the small panel OLED space by Chinese producers, so it is essential that the Chinese are met with every possible roadblock to make it less attractive for them to move outside of LCD production.
While a more aggressive stance might be thought of as too out-of-character for LGD executives, they seem to be at a crossroads with BOE and we expect an ‘official letter’ just incentivizes BOE to push harder. The middle of the road is not going to cut it anymore…
[1] 8,000 65” WOLED equivalents at 100% yield. More likely close to half that due to low yield.
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