LG Display to supply OLED TV panels to Samsung Elec - sources

LG DISPLAY

16/05/2023 05:34

(Adds shares in paragraph 8, analyst comment in paragraph 12)
    By Heekyong Yang
       SEOUL, May 16 (Reuters) - South Korea's LG Display Co
Ltd  034220.KS  will start supplying high-end TV panels to
Samsung Electronic Co Ltd  005930.KS  from as early as this
quarter, three sources said, in a deal that would help the
loss-making flat-screen maker turn profitable.
    LG Display aims to supply 2 million units next year and
boost shipments to 3 million and 5 million units in subsequent
years, two sources with direct knowledge of the matter said.
Initial supplies to Samsung would likely be 77-inch and 83-inch
white OLED (WOLED) TV panels. 
    For Samsung, the deal highlights how it is looking to expand
in high-end organic light emitting diode (OLED) TVs as
competition heats up in the lower end with Chinese vendors. OLED
panels cost nearly five times more than liquid-crystal display
(LCD) panels.
        With this deal, Samsung could overtake Sony Corp
 6758.T  as the second largest supplier of OLED TVs globally.
        Analysts have speculated that LG Display was in talks to
supply OLED TV panels to a new client. Reuters is first to
report details of the deal with Samsung Electronics.
    All the sources declined to be named because the deal is not
public.
    Both LG Display and Samsung Electronics declined to comment.
    LG Display shares reversed an earlier 1% drop and jumped
2.4% after the Reuters story. Shares in Samsung, which mainly
drives its growth from smartphone and semiconductor business,
rose 1.7%, beating a 0.2% gain in the broader market  .KS11 .
    Samsung Electronics, the world's biggest TV manufacturer,
has been slower than its hometown rival LG Electronics Inc
 066570.KS  in embracing OLED TVs, arguing the technology is
more suited to small devices such as smartphones and tablets,
partly due to the high cost of panels.
    For LG Display, shipments of 2 million OLED panels will be a
major boost, worth at least $1.5 billion and amounting to around
20%-30% of its total manufacturing capacity for large-size OLED
panels, taking it to full capacity, according to analysts.
    The company has been running its OLED factory below full
capacity due to a limited customer base and as a pandemic-driven
demand surge for new TVs has tapered off amid soaring inflation
and slowing economy.
    "LG's production rate will improve and is likely to reach
full capacity next year, helping it lay the groundwork to return
to profit," said Jeff Kim, an analyst at KB Securities.
    The company has been in the red for four consecutive
quarters since the second quarter last year due to weakening
global demand for electronic devices.
    The company supplies OLED TV panels to LG Electronics and
Sony. It also supplies smartphone displays to Apple Inc
 AAPL.O .
    Samsung Electronics has its own display-making unit Samsung
Display which focuses on OLED screens for mobile phones made by
Apple and Samsung.
    In OLED TVs Samsung currently has a 6.1% market share,
behind LG Electronics with 54.6% and Sony 26.1%, according to
market research firm Omdia. 
    The market is expected to grow nearly 6% to $11.7 billion
this year and to $12.9 billion by 2027, according to Omdia. 
    
    ($1 = 1,320.9300 won)

 (Reporting by Heekyong Yang; Editing by Miyoung Kim and Sonali
Paul)
 ((Heekyong.Yang@thomsonreuters.com))