China, Blocking Imports of Korean Displays Would Be 'Shooting Itself in the Foot' [Korea-China Supply Chain Analysis]

Supply Chain Analysis Report ③ Display
High Export Share of Common Parts Lowers China's Dependence
Domestic Firms Hit if Korean Imports Blocked

Even as the US-led Indo-Pacific Economic Framework (IPEF) gains momentum, the display sector, one of Korea's key export items, is expected to be less affected by China. This is because the proportion of semi-finished products such as steel and petrochemicals in Korea's exports to China is decreasing, while the share of electronic components like semiconductors and displays, where Korea holds a technological advantage, is increasing, resulting in relatively lower dependence on China.

According to the Korea International Trade Association on the 9th, Korea's exports of flat panel display items to China from January to April this year totaled $2.64028 billion, a 9.6% increase compared to the same period last year. This figure is more than three times higher than the amount imported from China for the same items ($840.68 million) during the same period.

Among the top 10 items Korea exported to China last year, flat panel displays ranked third with a total of $7.739 billion (4.8%), following semiconductors and synthetic resins. During the same period, the total global exports of flat panel displays amounted to $21.543 billion, with China accounting for 35.9% of that share.

Breaking down flat panel display export items, they include Liquid Crystal Displays (LCD), Organic Light Emitting Diodes (OLED), and display modules. Since the 2000s, China has especially transformed into a display powerhouse focusing on LCDs through massive government-led support and investment. According to market research firm Omdia, due to a sharp rise in LCD panel prices and increased demand, major Chinese LCD manufacturers recorded their highest sales and operating profits since their establishment in 2021. China's largest display company, BOE, announced that last year it achieved record results with sales of approximately 220 billion yuan (about 40.7 trillion KRW) and net profit of 26 billion yuan (about 4.8 trillion KRW), representing increases of 62% and 416% year-on-year, respectively.

However, Korea still maintains a dominant position in large OLED production technology. Recently, as China restructures its display industry toward higher value-added sectors, Korea's export structure to China is shifting toward essential parts and equipment for OLED production. In fact, Chinese display company CSOT has imported Korean OLED thin-film encapsulation equipment to begin initial production and technology development. This equipment is a key process that extends OLED lifespan by stacking multiple thin films to protect OLED materials.

It is explained that if China blocks imports of Korean parts due to Korea's participation in IPEF, Chinese companies could suffer greater damage. Especially for display companies, it is anticipated that if the Chinese blockade is lifted, the supply of essential parts such as polarizers and printed circuit boards (PCBs) will increase, suggesting that the Chinese government is unlikely to act rashly. Strengthening semiconductor alliances among IPEF member countries also poses a burden for China. Since OLED production involves processes like exposure, etching, and deposition using equipment similar to that used in semiconductors, there is a risk that import channels for equipment and parts could be blocked.

Professor Moon Dae-gyu of the Department of Display and New Materials Engineering at Soonchunhyang University stated, "The countries supplying equipment and parts for OLED production are mainly Korea, Japan, Europe, and the United States, which are the IPEF allies. China still prefers Korea's proven equipment, and smartphone set manufacturers also require panel imports, so China's influence on the global display supply chain is expected to be relatively limited."