China Swallows LCD with Low-Cost Offensive, Threatens OLED Too [Tech War, Birth of Advanced Nations]

Display Industry in Crisis
Chinese Companies Surpass Korean Companies for the First Time in History

The Korean display industry, which has lasted an impressive '17 years,' is experiencing a heightened sense of crisis like never before. Korea overtook Japan, the pioneer country, in 2004 and has led the global market since. Last year, it became a key industry accounting for 4.4% of the country's gross domestic product (GDP), but it is now shaken by fierce challenges from China.

The LCD business, pushed out by China's low-price offensive, is fading, and the advanced OLED market is also being fiercely pursued. According to the Korea Display Industry Association and others, China's display industry sales surpassed Korea's for the first time last year. China's market share stood at 41.5%, ahead of Korea's 33.2%. Amid this situation, government and National Assembly support is concentrated only on semiconductors and batteries, leading the industry to voice concerns about so-called 'display industry neglect.'

◆ Lost the LCD Market Due to Inability to Withstand Low-Price Offensive = According to the industry on the 17th, Samsung Display will completely end its LCD business, which has continued for the past 30 years, this month. The intensified competition and deteriorating profitability caused by China's aggressive market entry and expansion have ultimately led to the business closure process.

Samsung's LCD business served as a pillar that overcame the semiconductor recession sustained in the 2000s. In fact, from 2008 to 2013, LCD was a representative export product with annual export volumes higher than memory semiconductors for six consecutive years.

However, in the 2010s, Chinese companies rapidly grew, supported by massive subsidies and tax benefits from the Chinese government. Their growth resulted in the contraction of Korea's LCD industry. This was due to a so-called 'volume offensive' that disregarded price, entering the market late but flooding it with supply. This naturally lowered the LCD supply unit price, adversely affecting the profitability of Korean companies.

As a result, China's LCD market share grew to an overwhelming level. According to market research firm Omdia, in the first quarter of this year, China's LCD panel market share (based on sales) reached 51.8%. Korea accounted for only 14.9%. LG Display is also reportedly planning to reduce its TV LCD production scale by more than 10% in the second half of this year (July to December) compared to the first half.

◆ China's 'OLED Rise' Begins... "Urgent Government Support Needed" = China's pursuit is also evident in the OLED market. The large OLED market, mainly used for TVs, has long been monopolized by LG Display. However, it is expected that a significant portion of the market share will be taken by China in a few years.

In fact, BOE, China's top display company, has decided to increase OLED panel production by 70% this year. The resulting panel production volume is estimated to exceed 100 million units this year. BOE is also reportedly considering building a new OLED factory in Chengdu.

Facing China's fierce pursuit in both the LCD and OLED markets, concerns are rising within the industry. An industry insider said, "If China continues its aggressive pursuit backed by government support, it will inevitably have an adverse effect on Korea, which has maintained a monopolistic position in the OLED market."

The industry is raising its voice that the government and National Assembly should pay more attention to fostering the display industry. There is a call to include the display sector in the 'Special Measures Act on Strengthening and Fostering National Advanced Strategic Industries,' which will be implemented in August. The law mainly provides for tax credits of up to 50% on research and development (R&D) investments.