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BOE, China’s largest display company, was listed as a major panel supplier in Samsung Electronics’ business report. BOE has filled the vacancy created by Samsung Display’s phased reduction of large LCD panels for TVs.

The business report, which was registered with the Financial Supervisory Service’s electronic disclosure system, listed three major display panel suppliers for the company"s consumer electronics (CE) sector in 2021 -- BOE and CSOT of China and AUO of Taiwan. BOE was newly added as a major supplier. BOE surpassed LG Display in 2018 to become the world’s No. 1 LCD manufacturer.

Samsung Display decided in early 2021 to stop producing large LCD panels beginning from 2022. The decision was made to speed up its transition to next-generation QD-OLED panels as the profitability of the LCD business fell significantly due to a price war with Chinese companies.

It stopped the operation of L7 at Asan Campus in South Chungcheong Province, which had produced large LCD panels, in March 2021. An 8th-generation LCD production line at the Suzhou plant in China was sold in April 2021. However, it is still operating some of its large LCD production facilities at Asan Campus at the request of Samsung Electronics. Samsung Display is considering shutting down these facilities within June 2022.

Industry insiders say that Samsung Display"s withdrawal from the LCD business has weakened Samsung Electronics" bargaining power in negotiations with Chinese vendors.

Samsung Electronics’ price burden for TV panels has nearly doubled over the past year. The Samsung Electronics business report says that the company spent 10,582.3 billion won on purchasing display panels in 2021. This was an increase of 94.2 percent from the previous year (5,448.3 billion won). The main factor behind the increase is a rise in LCD panel prices. Samsung Electronics explained that prices of TV panels rose about 39 percent on year in 2021.

Industry insiders say one solution is to accelerate a shift to OLED-based TVs. Chinese panel makers are investing aggressively to develop large OLED panel technologies, but they have not yet reached the volume production stage.

Samsung Electronics is negotiating with Samsung Display and LG Display over the release of OLED TVs. LG Display is the only company that mass produces large OLED panels. It can produce 10 million TV panels annually. Samsung Display started mass production of large OLED panels at the end of 2021. The two Korean OLED panel makers adopt white (W) and blue (B) light sources, respectively.

BOE Technology Group, the Chinese electronic components producer, is expected to be the leader in producing LCD display panels in the coming years, with a forecast capacity share of 24 percent by 2022. China is the country that has the largest LCD capacity, with a 56 percent share in 2020.Read moreLCD panel production capacity share from 2016 to 2022, by manufacturerCharacteristicBOEChina StarInnoluxAUOLGDHKCCEC PandaSharpSDCOther-----------

DSCC. (June 8, 2020). LCD panel production capacity share from 2016 to 2022, by manufacturer [Graph]. In Statista. Retrieved February 02, 2023, from https://www.statista.com/statistics/1057455/lcd-panel-production-capacity-manufacturer/

DSCC. "LCD panel production capacity share from 2016 to 2022, by manufacturer." Chart. June 8, 2020. Statista. Accessed February 02, 2023. https://www.statista.com/statistics/1057455/lcd-panel-production-capacity-manufacturer/

DSCC. (2020). LCD panel production capacity share from 2016 to 2022, by manufacturer. Statista. Statista Inc.. Accessed: February 02, 2023. https://www.statista.com/statistics/1057455/lcd-panel-production-capacity-manufacturer/

DSCC. "Lcd Panel Production Capacity Share from 2016 to 2022, by Manufacturer." Statista, Statista Inc., 8 Jun 2020, https://www.statista.com/statistics/1057455/lcd-panel-production-capacity-manufacturer/

DSCC, LCD panel production capacity share from 2016 to 2022, by manufacturer Statista, https://www.statista.com/statistics/1057455/lcd-panel-production-capacity-manufacturer/ (last visited February 02, 2023)

LCD panel production capacity share from 2016 to 2022, by manufacturer [Graph], DSCC, June 8, 2020. [Online]. Available: https://www.statista.com/statistics/1057455/lcd-panel-production-capacity-manufacturer/

► When the leading Korean players Samsung Display and LG Display exit LCD production, BOE will be the most significant player in the LCD market. Though OLED can replace the LCD, it will take years for it to be fully replaced.

► As foreign companies control evaporation material and machines, panel manufacturers seek a cheaper way to mass-produce OLED panels – inkjet printing.

When mainstream consumer electronics brands choose their device panels, the top three choices are Samsung Display, LG Display (LGD) and BOE (000725:SZ) – the first two from Korea and the third from China. From liquid-crystal displays (LCD) to active-matrix organic light-emitting diode (AMOLED), display panel technology has been upgrading with bigger screen products.

From the early 1990s, LCDs appeared and replaced cathode-ray tube (CRT) screens, which enabled lighter and thinner display devices. Japanese electronics companies like JDI pioneered the panel technology upgrade while Samsung Display and LGD were nobodies in the field. Every technology upgrade or revolution is a chance for new players to disrupt the old paradigm.

The landscape was changed in 2001 when Korean players firstly made a breakthrough in the Gen 5 panel technology – the later the generation, the bigger the panel size. A large panel size allows display manufacturers to cut more display screens from one panel and create bigger-screen products. "The bigger the better" is a motto for panel makers as the cost can be controlled better and they can offer bigger-size products to satisfy the burgeoning middle-class" needs.

LCD panel makers have been striving to realize bigger-size products in the past four decades. The technology breakthrough of Gen 5 in 2002 made big-screen LCD TV available and it sent Samsung Display and LGD to the front row, squeezing the market share of Japanese panel makers.

The throne chair of LCD passed from Japanese companies to Korean enterprises – and now Chinese players are clinching it, replacing the Koreans. After twenty years of development, Chinese panel makers have mastered LCD panel technology and actively engage in large panel R&D projects. Mass production created a supply surplus that led to drops in LCD price. In May 2020, Samsung Display announced that it would shut down all LCD fabs in China and Korea but concentrate on quantum dot LCD (Samsung calls it QLED) production; LGD stated that it would close LCD TV panel fabs in Korea and focus on organic LED (OLED). Their retreats left BOE and China Stars to digest the LCD market share.

Consumer preference has been changing during the Korean fab"s recession: Bigger-or-not is fine but better image quality ranks first. While LCD needs the backlight to show colors and substrates for the liquid crystal layer, OLED enables lighter and flexible screens (curvy or foldable), higher resolution and improved color display. It itself can emit lights – no backlight or liquid layer is needed. With the above advantages, OLED has been replacing the less-profitable LCD screens.

Samsung Display has been the major screen supplier for high-end consumer electronics, like its own flagship cell phone products and Apple"s iPhone series. LGD dominated the large OLED TV market as it is the one that handles large-size OLED mass production. To further understand Korean panel makers" monopolizing position, it is worth mentioning fine metal mask (FMM), a critical part of the OLED RGB evaporation process – a process in OLED mass production that significantly affects the yield rate.

Prior to 2018, Samsung Display and DNP"s monopolistic supply contract prevented other panel fabs from acquiring quality FMM products as DNP bonded with Hitachi Metal, the "only" FMM material provider choice for OLED makers. After the contract expired, panel makers like BOE could purchase FFM from DNP for their OLED R&D and mass production. Except for FFM materials, vacuum evaporation equipment is dominated by Canon Tokki, a Japanese company. Its role in the OLED industry resembles that of ASML in the integrated circuit space. Canon Tokki"s annual production of vacuum evaporation equipment is fewer than ten and thereby limits the total production of OLED panels that rely on evaporation technology.

The shortage of equipment and scarcity of materials inspired panel fabs to explore substitute technology; they discovered that inkjet printing has the potential to be the thing to replace evaporation. Plus, evaporation could be applied to QLED panels as quantum dots are difficult to be vaporized. Inkjet printing prints materials (liquefied organic gas or quantum dots) to substrates, saving materials and breaking free from FMM"s size restriction. With the new tech, large-size OLED panels can theoretically be recognized with improved yield rate and cost-efficiency. However, the tech is at an early stage when inkjet printing precision could not meet panel manufacturers" requirements.

Display and LGD are using evaporation on their OLED products. To summarize, OLED currently adopts evaporation and QLED must go with inkjet printing, but evaporation is a more mature tech. Technology adoption will determine a different track for the company to pursue. With inkjet printing technology, players are at a similar starting point, which is a chance for all to run to the front – so it is for Chinese panel fabs. Certainly, panel production involves more technologies (like flexible panels) than evaporation or inkjet printing and only mastering all required technologies can help a company to compete at the same level.

Presently, Chinese panel fabs are investing heavily in OLED production while betting on QLED. BOE has four Gen 6 OLED product lines, four Gen 8.5 and one Gen 10.5 LCD lines; China Star, controlled by the major appliance titan TCL, has invested two Gen 6 OLED fabs and four large-size LCD product lines.

Remembering the last "regime change" that occurred in 2005 when Korean fabs overtook Japanese" place in the LCD market, the new phase of panel technology changed the outlook of the industry. Now, OLED or QLED could mark the perfect time for us to expect landscape change.

After Samsung Display and LGD ceding from LCD TV productions, the vacant market share will be digested by BOE, China Star and other LCD makers. Indeed, OLED and QLED have the potential to take over the LCD market in the future, but the process may take more than a decade. Korean companies took ten years from panel fab"s research on OLED to mass production of small- and medium-size OLED electronics. Yet, LCD screen cell phones are still available in the market.

LCD will not disappear until OLED/QLED"s cost control can compete with it. The low- to middle-end panel market still prefers cheap LCD devices and consumers are satisfied with LCD products – thicker but cheaper. BOE has been the largest TV panel maker since 2019. As estimated by Informa, BOE and China Star will hold a duopoly on the flat panel display market.

BOE"s performance seems to have ridden on a roller coaster ride in the past several years. Large-size panel mass production like Gen 8.5 and Gen 10.5 fabs helped BOE recognize the first place in production volume. On the other side, expanded large-size panel factories and expenses of OLED product lines are costly: BOE planned to spend CNY 176.24 billion (USD 25.92 billion) – more than Tibet"s 2019 GDP CNY 169.78 billion – on Chengdu and Mianyang"s Gen 6 AMOLED lines and Hefei and Wuhan"s Gen 10.5 LCD lines.

Except for making large-size TVs, bigger panels can cut out more display screens for smaller devices like laptops and cell phones, which are more profitable than TV products. On its first-half earnings concall, BOE said that it is shifting its production focus to cell phone and laptop products as they are more profitable than TV products. TV, IT and cell phone products counted for 30%, 44% and 33% of its productions respectively and the recent rising TV price may lead to an increased portion of TV products in the short term.

Except for outdoor large screens, TV is another driver that pushes panel makers to research on how to make bigger and bigger screens. A research done by CHEARI showed that Chinese TV sales dropped by 10.6% to CNY 128.2 billion from 2018 to 2019. Large-size TV sales increased as a total but the unit price decreased; high-end products like laser TV and OLED TV saw a strong growth of 131.2% and 34.1%, respectively.

The demand for different products may vary as lifestyles change and panel fabs need to make on-time judgments and respond to the change. For instance, the coming Olympics is a new driving factor to boost TV sales; "smart city" projects around the world will need more screens for data visualization; people will own more screens and better screens when life quality improves. Flexible screens, cost-efficient production process, accessible materials, changing market and all these problems are indeed the next opportunity for the industry.