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Technology Stocks : OLED Universal Display Corp
OLED 96.38-1.3%Sep 30 4:00 PM EDT

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From: STA20156/22/2021 11:41:41 AM
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Google Translation:
According to the domestic media the day before, it was reported that Samsung Electronics will be supplying WOLED TV panels from LG Display to start attacking the OLED TV market. This has been republished since last April. As LCD TV panel prices have risen sharply from the second half of last year, and LCD TV profitability has deteriorated, it is said to be joining hands with rival LG Display. However, after citing an official from the Samsung Electronics VD business division, as in the last time, Samsung Electronics' LG Display WOLED TV panel transaction theory is groundless and has no possibility. The industry adopts a WOLED TV panel between Samsung Electronics and LG Display. There has been much debate as to whether or not Clearly, this does not appear to be a story that has come out of nowhere. It is difficult to predict at this point, but we believe that Samsung Electronics' WOLED TV panel adoption is highly likely. Reports since February have mentioned several times about concerns about the profitability deterioration of Samsung Electronics' VD division, which sells only LCD TVs due to a steep rise in LCD TV panel prices from the second half of last year, raising the cost burden. The decision of LCD TV panel prices now rests with Chinese panel makers, who have survived the years of chicken games. Chinese companies' mid/large LCD capacity in 2022. The market share is expected to reach about 61%. There is also the possibility of strategic utilization rate adjustments by Chinese panel makers to protect profitability, so it is difficult to guarantee 100% decline in LCD TV panel prices next year. In this situation, there are not many options that Samsung Electronics' VD division can do. It is about whether to build pride and be swayed by Chinese LCD panel makers, or whether to join hands with LG Display to improve profitability from a business perspective rather than pride. Competitor LG Electronics has rapidly increased the proportion of profitable OLED TVs from the second half of last year. is going As a result, the operating profit margin of LG Electronics' HE division recorded 10.1% in 1Q21, surpassing that of Samsung Electronics at 8.9%. Establishing a cooperative relationship between the two companies is a win-win strategy for both companies. Samsung Electronics can expect profitability improvement by expanding its OLED TV lineup, and at the same time, it can be used as a means to pressure LCD TV panel prices. On the other hand, LG Display can achieve economies of scale by diversifying its first-tier customer base, thereby establishing a virtuous cycle structure that can stimulate OLED TV demand through improved profitability and cost reduction. Another rationale for Samsung Electronics' WOLED TV panel adoption From a business feasibility point of view, it is judged that the possibility of Samsung Electronics' OLED TV panel adoption is higher than ever. Already in the industry, Samsung Electronics will cooperate with Samsung Display from next year.

It is known that OLED TV will be released. To this end, Samsung Display plans to start mass production of the first Q1 (25K/month) line from 4Q21. Meanwhile, Samsung Display's domestic 8th generation LCD production line is likely to be operated by next year. Currently, within Samsung Display, there is insufficient space for additional large display panel production facilities. Therefore, if Samsung Display extends the operation of its 8th generation LCD line until next year, it seems unlikely that it will invest in new QD-OLED facilities for the time being. However, Samsung Electronics is the No. 1 player in the global TV market with annual LCD TV shipments of about 40-50 million units. to be. If Samsung Display does not expand additional capacity, it is estimated that the number of OLED TV panels that can be produced only through the Q1 line in 2022 and 2023 will be only about 1 million units per year. Even for this, it is highly likely that Samsung Electronics and Sony will share the quantity. This level alone is only 1~2% of Samsung Electronics' annual TV set shipments, taking into account a small amount of panel inventory, and it is not enough to meaningfully raise the profitability of Samsung Electronics' VD division. In the end, Samsung Display's 8th generation LCD line extension operation The decision is judged to mean that Samsung Electronics is likely to receive additional WOLED TV panels from LG Display. Paying attention to LG Display's large-size OLED capacity expansion in 2H, LG Display's 8th-generation large-size OLED capacity is about 175K/ Monthly (domestic 85K/month + China 90K/month). The annual production capacity of OLED TV panels here is about 10 million units. This year, LG Display's OLED TV panel shipments are expected to reach 8.1 million units, an increase of 81% compared to the previous year due to strong demand. If Samsung Electronics receives a WOLED TV panel from LG Display next year, existing customers such as LG Electronics and Sony There is a high possibility that companies will also expand their production. Therefore, even if Samsung Electronics conservatively assumes that the expected quantity of WOLED TV panels supplied from LG Display in 2022 is 1.5-2 million units, additional capacity expansion is necessary. Considering the physical time required for new facility investment, it is highly likely that capacity expansion will be decided during 3Q21.
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