BOE's Q1 Sales Surpass Samsung... LCD Surge Effect
Domestic Industry Recovery in Focus Amid Potential Price Decline in Second Half
[Asia Economy Reporter Jeong Hyunjin] Chinese display manufacturer BOE has risen to the global No. 1 position, surpassing Korean companies, thanks to the sharp surge in LCD prices. While Korean companies such as Samsung Display and LG Display were withdrawing from the LCD panel business, Chinese companies experienced a surprise boom due to COVID-19 demand and rapidly caught up. From the second half of the year, there is a possibility of LCD prices declining, drawing attention to whether the domestic display industry, which is attempting to shift its business portfolio, can recover.
According to Display Supply Chain Consultants (DSCC), a specialized display market research firm, the flat panel display (FPD) sales in the display industry reached $34.8 billion (approximately 38.7 trillion KRW) in the first quarter of this year, setting a record high. This represents a 1% increase from the previous quarter and a 52% increase compared to the same period last year. BOE recorded FPD sales of $7.7 billion in the first quarter, surpassing Samsung Display's $6.2 billion. According to DSCC, Samsung Display's sales have accounted for more than 20% of the entire industry in recent years, maintaining the No. 1 position. LG Display ranked third with sales below $6.2 billion in the first quarter of this year.
The factor that divided fortunes in the display industry in the first quarter was the price of LCD panels. Samsung Display and LG Display decided to withdraw from the unprofitable LCD business, and during this process, LCD prices suddenly surged, allowing Chinese display companies, which had focused on this segment, to earn high profits. The price of TV LCD panels for 32-inch sizes soared from $34 in June last year to $90 in June this year. For 50-inch and 65-inch panels, prices rose by 131.8% and 76.4%, respectively, during the same period.
In terms of operating margin, Samsung Display's operating profit was $1.537 billion in the fourth quarter of last year, accounting for nearly 40% of the industry's total share, but it dropped below 10% in the first quarter of this year. On the other hand, BOE recorded an operating profit of $1.4 billion in the first quarter, ranking first in the industry and capturing a 39% share of the total operating profit in the display industry.
However, with forecasts of LCD prices declining from July, the display industry is expected to face another change. DSCC reported that demand for TVs and other products, which expanded mainly in North America due to COVID-19, has gradually decreased as vaccine distribution progresses. DSCC stated, "The supply of LCD panels has begun to exceed demand," and added, "From July, prices of some sizes of TV LCD panels may fall."
The domestic display industry is seeking an appropriate timing to end LCD panel production while attempting to change its business portfolio. Samsung Display is accelerating development to start production of Quantum Dot (QD) displays in the second half of the year, and LG Display is accelerating its transition to OLED.
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