Fully discontinued LCD panel production at the end of the year, Samsung focuses on QOLED panels

Fully discontinued LCD panel production at the end of the year, Samsung focuses on QOLED panels

Samsung Electronics will close its TV factory in Tianjin, China, which is Samsung's only TV factory in China. According to reports, the above-mentioned Samsung TV factory may stop production at the end of October and be sold to TV foundries. As early as March of this year, a Samsung spokesperson publicly stated that it would completely terminate its LCD panel production in South Korea and China by the end of this year. LGD also stated at the beginning of this year that it would stop producing LCD panels in South Korea at the end of the year.

Deteriorating market conditions make LCD business difficult

The Tianjin factory is an important overseas TV production base for Samsung. It started operations in 1996 and mainly produces LCD TVs, LCD modules and other products. This factory is also Samsung's only TV factory in China, and more than 90% of its products are sold domestically. The cancellation of subsidies for energy-saving appliances, rising labor costs, and competition from local Chinese brands have continued to deteriorate Samsung's market situation in China, and its market share has continued to decline. As early as 2018, Samsung evaluated and reduced its TV production capacity in China. Since then, Samsung has handed over some low-cost TV models to original equipment outsourcing (OEM) partners, such as Gaochuang, Kangguan, and Ruixuan. In addition to deteriorating market conditions, changes in the international economic situation intensified operating pressures are also an important reason for Samsung to accelerate the adjustment of its supply chain layout. Earlier, Samsung closed two mobile phone factories in China, located in Tianjin and Huizhou.

In August of this year, Samsung announced that its last computer factory in China had ceased operations. After the TV factory is closed, Samsung Electronics' China factory will only be left with a chip factory in Xi'an and a home appliance factory in Suzhou. Saying goodbye to weak LCD demand and overproduction in the LCD era, Samsung's current factory shutdown is more directly related to its strategy to completely terminate LCD. In October last year, Samsung announced a tentative plan for one of its two LCD production lines in South Korea. A Samsung spokesperson said in March this year that it will terminate its LCD production in South Korea and China before the end of the year, and supply LCDs that customers have placed orders until the end of this year.

LGD also stated at the beginning of this year that it would stop producing LCD panels in South Korea by the end of the year. TrendForce's Optoelectronics Research Office pointed out that after the market share of Korean manufacturers of large-size LCD panels will rapidly converge in 2020, the market share is expected to decline from 28.4% in 2019 to 20.2%. In response to future development strategies, Samsung said that in the next five years, it will focus on upgrading an LCD production line in South Korea to a more advanced quantum dot panel production line. After bidding farewell to the LCD era, Samsung will accelerate the launch of quantum dot organic light-emitting diode (QD-OLED) panels.

Looking at the global LCD panel market, Chinese manufacturers are beginning to play a leading role. At present, the production capacity of several LCD panel factories in mainland China accounts for about 50% of the global LCD panel production capacity. BOE has surpassed LGD to become the world's largest LCD panel manufacturer. TrendForce analysts predict that by 2021, as domestic panel makers continue to release production capacity, the market share of Korean panel makers will drop below 10%. After Korean manufacturers have substantially reduced their production capacity, the balance of supply and demand is expected to remain stable in the future, and LCD panel prices have also seen a long-lost increase.

In August this year, LCD panel prices rose for the third consecutive month. Among them, 55-inch LCD panel prices rose by about 9% month-on-month, and small-size LCD panels rose by about 10%. The market is expected to continue to rise in September.