Samsung Elec will get OLED TV panels from LG Display.
According to three sources, Samsung Electronic Co Ltd (005930.KS) will begin receiving high-end TV panels from South Korea’s LG Display Co Ltd (034220.KS) as early as this quarter, as part of an agreement that will help the flat-screen manufacturer become profitable.
Next year, LG Display plans to ship 2 million devices before increasing that number to 3 million and 5 million units the following two years, according to two individuals with firsthand knowledge of the situation. White OLED (WOLED) TV panels between 77 and 83 inches will likely be the first supply sent to Samsung.
The agreement shows how Samsung wants to increase its presence in premium organic light emitting diode (OLED) TVs as competition from Chinese manufacturers intensifies at the lower end. OLED panels are roughly five times more expensive than LCD screens.
With this agreement, Samsung may surpass Sony Corp (6758.T) as the world’s second-largest provider of OLED TVs. Analysts have conjectured that LG Display was in discussions with a new client to provide OLED TV panels. Information about the agreement with Samsung Electronics was initially reported by Reuters.
Because the agreement is private, all of the sources declined to give their names. Samsung Electronics and LG Display both declined to comment.
Following the Reuters article, LG Display shares increased 2.4%, reversing an earlier decline of 1%. Shares of Samsung increased 1.7%, outpacing the market as a whole (.KS11), which saw a 0.2% rise. Samsung’s growth is primarily driven by its smartphone and semiconductor businesses.
The largest TV manufacturer in the world, Samsung Electronics, has been slower to adopt OLED TVs than its domestic competitor LG Electronics Inc (066570.KS), claiming that the technology is better suited to portable devices like smartphones and tablets due in part to the expensive cost of panels.
According to experts, exports of 2 million OLED panels will be a significant boost for LG Display, equivalent to at least $1.5 billion and around 20% to 30% of its overall manufacturing capacity for large-size OLED panels, bringing it to full capacity.