Display 'Long Long Winter'... China Increasing Investment vs South Korea Launching Counterattack

China to Increase Investment Plans Next Year... Accelerating OLED Transition
Korea Widens Gap Against China with Countermeasures

LG Display Paju Plant exterior view. [Photo by LG Display]

[Asia Economy Reporter Han Yeju] The winter season in the display industry is getting longer. As demand decreases and oversupply intensifies, the global display industry is significantly reducing its investment scale. In this situation, Chinese companies receiving massive government support are sparing no investment to catch up with K-Display. Domestic companies, at risk of losing their leading position to China not only in the budget segment but also in the premium market, are reluctantly increasing the scale of facility investments to respond to China's rise.

According to the display industry on the 23rd, recently Chinese display companies have announced plans to focus investments on mobile and IT panels next year.

Tianma announced plans to invest in 6th-generation mobile organic light-emitting diode (OLED) and 8.6-generation IT and automotive liquid crystal display (LCD) facilities. CSOT also plans to invest in 8.6-generation LCD facilities, and BOE intends to expand production facilities for 8.7-generation IT OLED panels. Visionox, which shipped about 10 million mobile OLED panels in the third quarter and ranked third in market share after Samsung Display and BOE, is reportedly seeking to expand its product lineup by ordering OLED panel vertical deposition equipment for research and development purposes related to its 6th-generation line V3.

This is a markedly different trend from the global display industry tightening its belts amid the harsh display winter that has hit for the first time in 10 years. According to market research firm DSCC, the global display equipment investment scale is expected to shrink nearly by half from 17 trillion won this year to 9 trillion won next year.

China, which surpassed Korea to become the number one in the overall display market including LCD and OLED last year, is expanding investments not only in LCD but also in OLED. Especially, as the LCD TV market is declining faster than expected, China's OLED transition investment is expected to accelerate. DSCC predicted that China's share of display production capacity will increase at an average annual rate of 11.9%, from 53% last year to 71% in 2025. China's display production capacity was only in the low to mid-30% range in 2017 but surged to 40% in 2018 and is estimated to account for half of the global market last year.

Domestic companies are on high alert. They have tried to fend off China's pursuit through technological advancement but now need to accelerate their efforts.

LG Display is accelerating future investments by expanding research and development (R&D) despite posting losses for two consecutive quarters. LG Display spent 1.8527 trillion won on cumulative R&D in the third quarter, investing 22.1% more than the 1.517 trillion won spent in the same period last year. Facility investments are also increasing significantly. Last year, LG Display executed facility investments worth about 3.2 trillion won on a cash basis, and this year, the annual facility investment is expected to increase compared to the previous year. Samsung Display also announced about 3 trillion won in investments. Samsung Display plans to focus investments on improving production efficiency of small and medium flexible and large quantum dot (QD)-OLED panels.

An industry insider said, "A rebound in the display industry is expected to be difficult for the time being, but we must continue to keep China in check," adding, "We are moving forward with a preemptive investment strategy while looking ahead to the market after passing through the global economic recession tunnel."

This content was produced with the assistance of AI translation services.