Single market OLED panel and market leader OLED TV market, so why LG has to worry when Samsung develops new technology?
LG Display is about to have a promising year ahead. This year, the company plans to deliver 4 million OLED TV panels, up from 2.9 million last year. But behind that joy, the company is worried about the LCD market. LCD panel prices continue to fall and they are one of the largest manufacturers for the largest TVs. Moreover, the company's main profit is also from here. Their operating profit last year was down 96% over the same period. Despite the OLED TV business being profitable for the first time this year, it has a relatively small scale overall. Revenue increased more slowly than expected, making the company feel pressured.
Meanwhile, rival rivals Samsung enjoy the price of LCD panels reduced. Their LCD TVs add a quantum dot layer, which provides an outstanding advantage in color and brightness. At the same time, the company has just introduced a 75-inch microLED TV prototype at the early CES, along with OLED-like LED technology (Organic LED) but uses more durable glowing materials. And yet, Samsung Display has confirmed they are pursuing QD-OLED technology. As soon as this news was spread by Korean media, it made LG's internal fear, even panic.
LG is leading the OLED TV market and large OLED panels
LG bet entirely on OLED
Both LG Display and LG Electronics place big bets on OLED technology. They need something that surpasses Samsung, who beat Sony in 2007 sales, and LG is forever the only one to lag behind these two brands. Therefore, when Samsung was discouraged with OLED and decided to withdraw at the same time as the Sony-Panasonic alliance in 2014. LG was quick to seize the opportunity. While Samsung turned to QD-LCD technology, introduced by Sony for the first time in 2013, the company chose OLED in hopes of taking advantage of the applause to win. Because OLED is still appreciated, Samsung has surrendered.
At the time the two companies turned in different directions, Samsung argued that OLED would not be profitable, and could not handle its critical weakness. The company mentions "burn-in" as an attachment to OLEDs, making the TV life cycle shorter after a few years of use because the background degrades pixels. They believe that this technology is only suitable for smartphones with shorter life cycles than TVs. Moreover, the cost of LCD investment is significantly cheaper than OLED, the profit margin is greater thanks to the huge production scale. This decision was very controversial, but it was finally released.
Samsung and LG are pursuing OLEDs, but each has a different direction
As for LG, it introduced White OLED TVs that fully utilize white glowing pixels (White) instead of traditional Red, Green, and Blue colors. They used RGBW matrix color filters consisting of four pixels Red, Green, Blue and White to create a display image. This eliminates Blue's image which often causes heterogeneous pixel degradation, a difficult technical barrier to overcome. This technology was acquired by LG Display from Kodak and further developed, then commercialized as you know it now.
Samsung strongly opposes LG's approach, criticizing that White OLED is not "true OLED" (RGB OLED), the traditional type using Red, Green, and Blue structures. In theory, RGB OLED is indeed the highest form of this technology, but commercialization on TV is impossible. Currently, RGB OLED is mainly known through mobile screens, laptop screens. And the most advanced is Sony's high-end dedicated screen that is very expensive. Therefore, although Samsung tried to criticize White OLED, LG Display's direction still received full support from management and experts.
Three OLED technologies include RGB, Blue and White
For LG, they absolutely believe in the future that OLED will dominate TV. In 2015, the image quality helps their TV receive the rain of compliments. LG Display recorded record profits, but not with OLED but LCD. During the time of investment in expanding production scale, they have to spend billions of dollars on foundation lines, improve the rate of finished products, increase output, … Therefore, the profits are mainly due to the LCD chains are working very efficiently.
New leader, new period
When President Koo Bon-mon died, his son Koo Kwang-mo became the new CEO of LG Corp to become the fourth generation leader of the fourth largest enterprise in Korea. It was initially anticipated that there would not be much turmoil in the organization, but it turned out that the new Chairman did the opposite. He quickly promoted Kwon Yong-soo to become the second powerful person in the group. Kwon is a keen strategist, always pursuing long-term plans. When Samsung and Apple embarked on a legal battle, the US company wanted to limit shopping from competitors and it was Kwon who saw the opportunity. He convinced Apple to use LG Display's LCD screen for the iPhone.
LG believes that OLED will be popular on TV faster than smartphones, so they place a full bet
Another notable decision of Kwon is to choose to bet on large OLED. LG believes that the speed of applying OLED to TVs will be faster than smartphones, at the time of intention, this belief can be understood. However, recently LG Display is in big trouble. They don't have any backup plans, all the resources have been put into big OLED. While Samsung shows a lot of viable options in the future.
Samsung comes back
The contract to supply screens for Apple was extremely valuable, signed in 2016. This is seen as a symbolic victory for Samsung before LG, showing that the direction of commercializing mobile OLED panels is a The right decision, the speed of this technology spread on smartphones has far surpassed the television market. Currently, Samsung Display sells panels for many companies, from Samsung Electronics to Apple, Huawei, and Xiaomi, all leading the smartphone market.
Samsung buys cheap LCD panels and sells them under the high-end QLED brand, making a lot of profits
For TV, Samsung may have lost many battles, but now the company is inclined to win the entire war. Finally, QD-LCD technology, which Samsung changed its name from SUHD in 2015 to QLED in 2017, showed another decision that surpassed LG. Since 2017, prices of LCD panels have fallen rapidly and become more and more plentiful, thanks to Chinese firms with back-to-back governments. This was fully utilized by Samsung, buying cheap panels and selling them with their high-end brands, adding a quantum dot to improve the image. A recent report from IHS Markit shows that Korean companies buy quite a lot of 65-inch panels from BOE (China).
In contrast, LG Display suffered from this trend. LCD still accounts for a lot of their revenue, while OLED is not enough scale. In 2017, Samsung made another "fateful" decision. When BOE started the 10.5 generation factory, Kwon Oh-hyun, Samsung's then-leader, rejected the plan to expand Samsung Display's production. This means that Korean companies accept to give up competition with rivals, saying that LCD prices will continue to decline, so investing here is hard to recover profits later. Instead, Samsung intensified its acquisition of cheap Chinese panels, adding quantum dots and selling under the high-end QLED brand. And LG Display stuck with the LCD market going down, letting its competitors make good use of this advantage. Currently, both of them have stopped investing in LCD chains, while TV producers buy lots of panels from Chinese firms.
Samsung and LG are buying lots of panels from Chinese firms
IHS Markit predicts that in the first quarter of this year, the price of LCD panels is 508 USD, by 2023, will be reduced to 393 USD. Before the withdrawal of Korea, Chinese firms are expected to dominate the market in all segments. Not only cheap, Samsung also captured another advantage of LCD display: brightness. OLED displays often have a pixel aperture – a pixel-illuminated region – larger than an LCD. This helps with higher luminous efficacy, even when resolution increases. However, when the brightness increases, organic pixels suffer from higher voltages and increase the risk of degeneration, while LCDs are not because pixels are just "inspired" by light from inorganic LED backlighting. With 8K trends, LCDs easily increase brightness without worrying about unwanted issues, and OLED is available. Although LG technology has the advantage of bright pixel performance, but they still use the glowing architecture, they cannot fully exploit the potential of OLED. So boosting the ultra-high-end segment, Samsung has "hit a double-hit arrow" when hitting two OLED weaknesses: price and brightness.
Pixel aperture is the advantage of OLED TVs when improving resolution
LG is expected to release an 8K OLED TV in the second half of 2019, but it is almost impossible to compete with 8K LCD TVs including Samsung's QLED 8K. Regarding market share, in 2017 when Samsung launched QLED, they were reduced to 26.5%, LG was 14.6% and Sony was 10.2%. But last year, Samsung increased to 29%, LG was 16.4% and Sony was 10.1%. The price advantage helps Samsung sell more QLED TVs (QD-LCD technology). While LG Electronics and many others are restricted to OLED panels, they cannot currently pass the QD-LCD. Consolation is that although OLED lost sales, OLED won the revenue, due to the higher average price of each TV model.
Samsung has not had to enjoy "all pink" in the last few years. Their market share has plummeted, 21.6% in 2016, to 20% in 2017 and 18.7% in 2018, is expected to continue to decline. As for LG, they are almost on par with a market share of 12.2%. This means that the overall sales of both companies are going down, but the two high-end brands QLED and OLED are eating into the minds of consumers, helping to strengthen their market position. Customers seem to be wondering which TV to choose from. Both have historical options for general purpose, albeit different. In the last few years, they have focused on protecting profits and countering the invasion of Chinese brands. Ignoring traditional LCD, every company has a direction for the future. But Samsung seems to overtake the opponent again.
Currently Samsung and LG are competing with QD-LCD and OLED, but the future will appear new technology
Three technologies deal with one
Samsung at the same time promotes all three technologies: QD-LCD, microLED, QD-OLED. They created a race in-house. Samsung Visual Display pursues QD-LCD and microLED, this is the TV business unit. And Samsung Display sells base panels to explore QD-OLED. This is a familiar gesture of Samsung in the past. In the early 2000s, it was not possible to determine which technology would dominate the market, so Samsung decided, investing both PDP (Plasma) and LCD.
In addition to Samsung, many other companies are also pursuing microLED. Apple, Google, Foxconn are all reported to invest in developing microLED. Their application direction is mainly smart watches, AR / VR screens. Sony introduced the world's first microLED commercial product in 2016. Developed and manufactured by the group's semiconductor division, known for its CMOS image sensors, it accounts for more than half of the market. A year later, they started selling these professional systems to businesses and organizations. Recently, Sony has introduced a 20K screen of nearly 20m in Japan, this is the world's largest version of microLED technology today.
CLEDIS system of Sony installed in Japan, is the largest version of microLED technology today
As for Samsung, the big man from Korea signed an agreement with a Chinese company to supply miniLED chips, which are used for the professional version of The Wall and create the first prototype in 2018. With the latest version early in 2019 , microLED chip is provided by PlayNitride (Taiwan), packaged with Samsung's proprietary semiconductor technology. Thanks to technical improvements, they can introduce 4K resolution on 75-inch sizes smaller than the first prototype, which uses a miniLED chip. Not only is the LED chip scaled smaller than 1/15 compared to the 2018 prototype, the pixel pitch is also reduced, helping to stuff more pixels on the same screen size.
And yet, Samsung is currently studying QD-OLED, a direction that combines Blue OLED with quantum dots. They are expected to be piloted in late 2020, and for mass production in 2023. QD-OLED promises to limit burn-in phenomenon, while reproducing abundant color output than LG Display's White OLED . Theoretically, this technology promises to bring better image quality. TCL is also pursuing this technology and they have introduced a screen prototype with experts.
75-inch The Wall prototype, using microLED chip from PlayNitride and Samsung's semiconductor process
The future LG OLED is besieged
But that is the direction of Samsung Display, while the TV business unit is determined with the current QD-LCD technology. "We expect this year's QLED output will reach 5 million units …" and they deny the launch of OLED TVs. Of course, due to concerns about burn-in problems, low production (scale is not enough to earn abundant profits). The company will trade microLED TVs in the future, when the supply is sufficient and the production process is completed. In the short term, QLED TVs will still be the focus. Meanwhile with LG, though White OLED no longer Blue pixels, but it still inevitably burn-in. It has been seven years since the company started the OLED TV era and the promise "solve the burn-in problem completely" not yet completed.
A recent report showed that while QLED is primarily known by Samsung (because many companies do not participate or have given up), the OLED block made by LG has 15 TV vendors participating. So in a few years, those who have bought OLED TVs can now completely face burn-in situations. But of course the company cannot admit this issue publicly, they have put everything they have into the OLED Alliance. There is no alternative, while Samsung has three, QD-LCD is currently consolidating the company's profitability very firmly. And the future, microLED or QD-OLED can create breakthroughs.
QD-OLED built from Blue OLED and quantum dots, more promising than White OLED of LG
The company can sell QD-OLED in parallel with QD-LCD to consumers, while microLED is provided to businesses like Sony is doing. If prices for LCD panels and quantum dots continue to fall, they can boost QD-LCD to medium-range TVs and expand into gaming computer screens. QD-OLED will directly confront LG's White OLED in the high-end segment, the same is OLED, but Samsung's model has a better image quality, plus a stronger brand, with more wins than LG TVs. This is a bad scenario with the company betting all for OLED. It is possible that Samsung's initial output of panels is not enough to compete, but only with the output (which LG has opened up the market for OLED TVs before), they can continue to produce until there is a foothold. sure.
Ambitious Man (According to Znet)