Display Soars with 'Tax Benefits'... OLED Investment Set to Significantly Increase

Display Industry "Welcomes Increase in Tax Credit Rate" with Enthusiasm
Accelerating New Investments in 8th Generation OLED for IT
However, Legislative Procedures for National Strategic Technologies Must Be Completed

Samsung Display Flexible OLED. [Photo by Samsung Display]

[Asia Economy Reporter Han Yeju] The display industry has expressed "active welcome" regarding the government's announcement on the 3rd to raise the tax credit rate for investments in national strategic industries. In a situation where competition with China is becoming increasingly fierce, the government's investment support measures are being seen as groundbreaking. The display industry is expected to accelerate investment timelines for the world's first 8th-generation OLED for IT applications through this decision.

The plan centers on providing a tax credit of 15% for large and medium-sized enterprises and 25% for small and medium-sized enterprises on investments in national strategic technology facilities. Considering the additional 10% tax reduction for increased investments in national strategic technology facilities this year only, the maximum tax credit benefits can reach up to 25% for large and medium-sized enterprises and up to 35% for small and medium-sized enterprises.

Recently included in national strategic technologies, the display industry is showing enthusiasm for the government's additional tax credit proposal. The Korea Display Industry Association stated, "Since the government support that enabled Korea to achieve the world's number one display market position in 2004, this is a groundbreaking government investment support measure announced after 20 years," adding, "In the current situation where competition with China is intensifying, this unprecedented government investment support is even more welcome in our display industry."

In fact, the Korean display industry, which held the undisputed number one position for 10 years, lost the global sales lead to China last year and is now facing threats even in technology sectors. The organic light-emitting diode (OLED) industry, considered a future growth engine, is also facing fierce competition from China. The small OLED market, represented by Apple's iPhone, has seen Samsung Display's monopoly broken. Not only LG Display but also BOE, albeit with lower specifications, are securing market share. The large OLED market, led by LG Display, is in a worse situation as TV demand has sharply declined due to global inflation and economic recession.

Accordingly, the industry expects that the increase in the tax credit rate will accelerate new investment decisions, including the world's first 8th-generation OLED for IT applications currently under review by panel companies. In August last year, Choi Joo-sun, CEO of Samsung Display, announced at IMID 2022 (International Meeting on Information Display) that "We will invest in an 8th-generation IT OLED production line aiming for operation in 2024." The 8th generation (2200×2500 mm) has a larger substrate size than the 6th generation (1500×1850 mm), allowing more panels to be produced at once. This means shorter production times and cost reductions.

Jung Ho-young, CEO of LG Display, also hinted at the possibility of new IT OLED investments at 'K-Display 2022,' held around the same time, stating that "Large OLED and IT panels have compatibility." Currently, LG Display has announced plans to invest 3.3 trillion KRW last year to expand production lines to strengthen the relatively weaker small and medium-sized OLED segment compared to large OLEDs and has begun full-scale investment. It is also evaluated that a foundation has been laid for Korean companies to lead in the IT market, where OLED still accounts for only about 4%.

However, since display technology must complete the legislative process to be included as a national strategic technology, the situation is more urgent compared to semiconductors and secondary batteries, which were already included. Last month, the government announced the '2023 Economic Policy Direction,' which includes 'investment promotion and regulatory innovation' measures, incorporating display technology alongside semiconductors, batteries, and vaccines as national strategic technologies. It is analyzed that companies will be able to focus on OLED business only if the legislative process passes swiftly along with the support measures. The Display Association emphasized, "We urge the prompt advancement of the legislative process to include display technology as a national strategic technology to support rapid corporate investment."

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