What Display Daily thinks: Maybe Samsung and LG can take to heart everything they have learnt from Apple; develop your own products but don’t make any of them yourself. None. Zero. Ship out all your manufacturing. Keep all of your R&D, and keep all the main Chinese display makers running at capacity to drive down prices, and increase your own margins knowing that your brand power is going to give you an edge.
The cost of keeping Korea as a manufacturing base for displays, in competition with Chinese panel suppliers, is not going to be competitive, no matter how you slice it or plan for it in the next five years.
Chinese investment in its own manufacturing infrastructure is effectively a zero interst loan to the industry because of the backing of local and national government. Economic sanctions have only helped to make the country stronger and more agile, not to mention a huge indigenous market that is fueling growth and the growth of opportunities for the future. The focus of the Korean display industry on manufacturing, particularly as Samsung and LG try to keep their technology distance from China’s with diminishing returns, is an anachronism.
The best thing that could happen to Samsung and LG is the rise of myriad Chinese and Taiwanese suppliers of all display panels for their terminal product businesses.
It makes sense not to manuacture things but to make things. Subtle difference but of enormous consequence to the bottom line.
Samsung Plans to Outsource Some MicroLED Production to Chinese Companies for Cost Reduction
Samsung Electronics is planning to outsource part of its MicroLED production to Chinese companies as it seeks to reduce manufacturing costs. The move is focused on lower-end MicroLED displays aimed at markets such as India and the Middle East, which account for 20-30% of Samsung’s overall MicroLED signage product line.
Samsung’s decision to explore outsourcing is driven by the advancements in MicroLED technology by Chinese companies, which have significantly narrowed the gap with Samsung’s in-house production capabilities. By outsourcing to Chinese firms, Samsung expects to lower its production costs by 5-10%, making its products more competitive in cost-sensitive markets.
The expected receipient of Samsung’s business is Shenzhen MTC:, along with its subsidiaries Zhaochi Jingxian and Zhaochi Guangyuan. The company specializes in MicroLED module and packaging technologies, particularly in COB (chip on board) small-pitch LED displays and SMD LED packaging. The company has been actively working on reducing costs through strategies such as increasing penetration rates, miniaturizing LED chips, and developing virtual pixel technology.
While Samsung plans to outsource the production of lower-end MicroLED modules, it will continue to focus on high-value-added technologies such as seamless splicing and module bonding, which are critical for the overall quality and integrity of the final product. Samsung will also retain control over the production of higher-end MicroLED products, using advanced LTPS TFT technology for its home-use TVs, while relying on PCB technology for its commercial MicroLED products.
And there’s more possible news on Samsung’s adverntures in outsourcing. Omdia has told Korea’s The Elec that if TCL CSOT acquires LG’s Guangazhou LCD plant and business, Samsung may face a bit of a quandry. Presently, TCL CSOT has 21% of Samsung’s LCD panel business, and the addition of the LG acquitiion will take that figure to 35%. To avoid dependence on TCL CSOT, Samsung will prboably look To BOE, HKC and Innolux.
