[Asia Exclusive] "If Display Super-Gap Is Not Maintained, Electronics Industry Ecosystem Will Collapse"

Interview on the 100th Day of Kim Seongjin's Inauguration as Executive Vice President of Korea Display Industry Association
"Display is a Core Device of Civilization, Must Maintain Super-Gap and Not Lose Leadership to China"
Despite Partial Domestic Production of Materials, Parts, and Equipment, Key Materials Still Depend on the US and Japan
Urgent Need for Policy Support Including M&A and Restructuring through the One-Shot Law

Kim Sung-jin, Executive Vice President of the Korea Display Industry Association.

[Asia Economy Reporters Hyewon Kim and Dongwoo Lee] "If we do not maintain a super-gap in the display industry, the electronic industry ecosystem, including TVs and smartphones, will collapse like dominoes. Display is not just a single industry but the vanguard of the nation where all technologies converge."

Kim Sung-jin, the full-time vice chairman of the Korea Display Industry Association, explained the status of the display industry this way in an interview with Asia Economy commemorating his 100 days in office. The secret behind South Korea’s TVs, computers, smartphones, and other home appliances ranking first in the world lies in the hidden competitiveness of displays. Citing Japan as an example, Kim said, "In 2004, Korea surpassed Japan in the display industry, coinciding with the collapse of Japan’s electronics industry," adding, "As the leadership in display technology shifted to us, the electronics market followed."

The problem is China’s fierce pursuit. Kim warned, "If the display market is lost to China, we will face a situation similar to Japan’s. We must have an urgent awareness that if we fail to maintain the super-gap in display technology and the industry collapses, not only home appliances but also the South Korean economy will collapse." He emphasized that large-scale investments by major companies like Samsung and LG are essential to maintain this super-gap. However, he also stressed, "The government should actively support the smooth progress of mergers and acquisitions (M&A) and restructuring during the future industrial restructuring process through the 'Special Act for Revitalizing Corporate Vitality (One-Shot Act)' by simplifying administrative procedures."

- It has already been 100 days since your inauguration.

▲I feel a heavy responsibility as I took office during a difficult time. The Korean display industry is currently at a critical turning point, restructuring its business from LCD to OLED. Since my inauguration, I have visited sites of Samsung Display, LG Display, and companies in materials, parts, and equipment sectors, and met with experts from government agencies, academia, and research institutes related to displays. I realized the crisis that our industry faces a golden time amid paradigm shifts and the huge challenge from China.

- You have frequently visited the field; which company left a strong impression?

▲The first company I visited, Jusung Engineering, left a strong impression. As soon as I entered the main gate, a large Taegeukgi (Korean national flag) installed on the inner wall caught my eye. The founder explained that it was placed to instill pride and responsibility as the 'national representative of Korea' among employees even during extremely difficult management times. I was moved by this. This company, famous for aggressive R&D investment, showed a strong sense of mission and focus on innovation, which made me feel the weight of responsibility once again.

I was also deeply impressed when visiting Narae Nanotech. The entire outer wall of the headquarters building is painted with tile murals reminiscent of the Altamira cave paintings in Spain, considered the first display of humanity. Reflecting on all information media such as murals and paper that have conveyed knowledge over tens of thousands of years, it was an opportunity to reconsider the important meaning of displays as the center of civilization today.

- What difficulties do companies complain about? What are the short-term and mid-to-long-term challenges?

▲The most urgent issue is the disruption of business activities due to international travel restrictions. Panel companies are affected in new and expansion line setups, impacting new product production, and equipment companies face difficulties in overseas equipment orders and setups. Mandatory self-quarantine costs upon entry and exit are also a heavy burden for small and medium-sized enterprises.

The poor investment environment for companies is also concerning. While demand for high-end products, the main market for Korean panel companies, is stagnant, mid- to low-priced products still lead the market. Although premium innovative products such as OLED TVs and foldable phones are being launched, their high price limits penetration into existing markets. To realize economies of scale, production expansion through investment is essential, but externally, demand for high-end products is low, and internally, companies’ poor business performance limits investment capacity, making the situation difficult.

- China’s pursuit is fierce. How do you assess the technology gap between Korean and Chinese companies, and what are the ways for Korean companies to lead next-generation technologies?

▲China and we have a relationship of love and hate. We must maintain a super-gap in displays but sell equipment to China, the largest market. As of last year, Korea’s share of the global OLED market was 89.4%, and China’s was 9.8%. China’s share, which was only 0.4% in 2017, rose to nearly 10% in two years. The growth rate of OLED production capacity is even faster. China’s production capacity is expected to expand from 22% of Korea’s level last year to 54% in 2023 and 78% in 2025. Experts estimate the technology gap in OLED ranges from 1-2 years to up to 3 years.

In this situation where China is catching up in the Korean OLED market, Korea’s most important strategy is to create new form factors through technological innovation. Since there is still a technology gap with China, when China invests in OLED, Korea needs to move to a higher market level with QD, foldable, rollable, stretchable displays, etc. This will maintain a technological super-gap that prevents China from catching up through large-scale volume offensives like LCD. Additionally, Korea must create and preoccupy demand in new markets such as augmented reality (AR) and virtual reality (VR) displays to respond to the spread of untact culture, beyond existing markets like mobile and TV.

- The Japanese export restrictions have raised major issues not only in semiconductors but also in display materials, parts, and equipment. How realistically can we assess the current stage of technological self-reliance?

▲We still depend on Japan and the U.S. for core materials (emitting materials, FMM, etc.) and equipment (exposure machines, ion implanters, etc.) necessary for OLED manufacturing, but through cooperation among large, medium, and small companies, many items such as large deposition machines, PI coating machines, electronic materials, and polarizers have been localized. Notably, hydrofluoric acid, a Japanese export-restricted item, was 100% localized by the end of last year, and polyimide alternatives were developed by DowinSys, with successful product development by Kolon Industries and SKIET. The Japanese export restrictions have proven the potential of our materials, parts, and equipment companies. However, core equipment like exposure machines, ion implanters, and FMM, which are 100% imported, are not easy to localize. Continuous support for nurturing basic core capabilities is necessary.

- What are the direct and indirect impacts of COVID-19 on the industry?

▲With the LCD market maturing, China’s rapid growth, and the emergence of the COVID-19 variable, the display industry is facing more difficulties than ever. Postponement of sports events, economic contraction in advanced countries, and reduced income due to minimized external activities have reduced demand for mainstream products like foldable phones and TVs, leading to poor performance for panel companies. However, the spread of remote work and online education has increased demand for IT product panels such as laptops, which is an opportunity. I hope new products applying unique technologies like foldable phones and rollable TVs will act as new demand drivers.

- Do you have any goals during your term?

▲In the era of the 4th Industrial Revolution, the amount of information is expanding exponentially. Displays are the core devices connecting infinite information and humans and will lead the 4th Industrial Revolution. Beyond just showing images, displays that provide multisensory experiences will offer limitless expansion possibilities to other industries. To respond to these changes, I will work with the government to devise ways to expand the market. I will promote meaningful discussions in convergence areas such as education, automobiles, architecture, and healthcare, and pursue policies that can actively create markets.

Interviewers = Hyewon Kim, Deputy Head of the Industry Department; Edited by Dongwoo Lee