Korean LCDs Struggling Amidst Chinese Competition, Facing Increasing Challenges

[Asia Economy Reporter Changhwan Lee] Domestic display companies are struggling in the global market as Chinese firms take away market share. While Korean companies are shrinking their LCD businesses under pressure from China's low-price offensive, Chinese companies are quickly occupying that space. There are calls for rapid development and expansion of sales of premium products with technological superiority such as QD (Quantum Dot) displays and OLED.

According to market research firm TrendForce on the 10th, China's BOE ranked first in the global monitor panel market in the first half of this year with a market share of 20.2%. BOE increased its share by more than 3 percentage points from 17% in the first half of last year.

LG Display ranked second with a market share of 15.7%, showing little change from the first half of last year. Taiwan's AUO and Innolux ranked third and fourth with 11.3% and 10.2%, respectively. Samsung Display was fifth with 9.1%.

Looking at the market share by country, the share of Chinese-made monitor panels is on the rise. The market share of Chinese monitor panels increased from 32% in the first half of last year to 38% in the first half of this year. Meanwhile, Korea's share remained steady at 33%, and Taiwan's share dropped from 35% to 29%.

The total global monitor panel shipments in the first half of the year reached 44.2 million units, up 6% from the same period last year. This increase was due to higher sales of laptops and PCs amid the spread of COVID-19 this year. However, Korean companies have been shrinking their LCD panel businesses, so they have not significantly benefited from the increased panel demand.

Chinese companies like BOE and China Star Optoelectronics Technology (CSOT) increased production by converting existing TV panel lines to monitor panel lines in response to rising monitor panel demand. In particular, BOE, the world's largest LCD panel maker, produced 20.2 million monitor panels in the first half of this year, a 19% increase compared to the same period last year, by manufacturing monitor panels on some TV panel lines in Wuhan, China.

Domestic companies are also falling behind in TV panels as well as monitor panels. TV panel shipments in the first half totaled 129.04 million units. Due to reduced TV sales amid COVID-19, shipments decreased by 8.4% compared to the previous year. BOE ranked first with an 18% market share, followed by CSOT at 16.5%. Innolux was third with 15.8%, and China's HKC ranked fourth with 10.8%.

Samsung Display ranked fifth with 9.3%, and LG Display was sixth with 9.1%. The market shares of Samsung Display and LG Display fell by 2.7 percentage points and 7.2 percentage points, respectively, compared to the same period last year. Meanwhile, BOE's share rose by 1.3 percentage points, and CSOT's by 2.5 percentage points.

The gap in market share with China is expected to widen further. Samsung and LG, struggling against low-priced Chinese panels, have ultimately decided to reduce their LCD panel businesses. In the process of shrinking their LCD panel businesses, Korean companies are suffering from the double burden of declining market share and poor profitability.

Experts point out that domestic companies need to be more proactive in developing and expanding premium products to get ahead in the display competition with China. Samsung is pushing QD displays, and LG is focusing on OLED as the next-generation flagship products to succeed LCD.

A display industry insider said, "Samsung and LG are experiencing a temporary stagnation in their display businesses as they transition from traditional LCD to premium products," adding, "They need to move faster to seize leadership in the next-generation panel market."