Chinese Threat to Korean Makers is Rising

Analysts speaking at the Korea Display Week had gloomy predictions for Korean display makers’ LCD business. The LCD market this year will be affected by long-term oversupply, falling demand and the rising influence of Chinese display makers, various analysts said.

Chinese display companies had roughly a 70% share of the 32″ LCD panel segment last year. IHS’s Chung Yoon-sung said that this will fall to 60% in 2016 as they instead turn towards large-size panels: a traditional stronghold of Korean firms. “2018 will be the year when the scale is tilted in favor of the Chinese players in the entire LCD market”, he added.

Estimates by Korean investment firms predicted Samsung Display posting a loss of KRW400 billion ($352 million), due to the increasing presence of Chinese rivals. SDC closed five LCD production lines last year, and LG Display has also halted production at several recently. Chinese firms, however, are being supported by tax benefits and cheap land.

From Q1’14 – Q4’15, China’s BOE raised its LCD panel market share (by shipment) from 6.8% to 11.6%. At the same time, LGD fell from 25% to 23.8%, and SDC from 21.2% to 19.1%. IHS estimates that government subsidies granted to BOE and domestic rival China Star Optoelectronics (CSOT), between 2011 and 2015, exceeded CNY12.8 billion ($2 billion) and CNY8 billion ($1.2 billion), respectively.

Chung said that the anticipated increase in large display supply will cause the price of large-screen TVs – especially 55″ and 65″ units – to fall significantly.

Korean makers will need to focus on high-end segments like OLED displays, was the advice of analysts.