Could prices on 4K OLED televisions be coming down soon?

Indications in a second-quarter financial report from the world’s primary supplier of OLED TV panels, LG Display, seem to point in that direction.

Why do we say this? When supply is high prices tend to be low. LG’s OLED panel prices have been high compared to LED-LCD panels, due to a more difficult to manufacture nature that has limited yields and slowed LG’s production build out.

Following a financial report from LG Display, that seems to be changing quickly. The OLED TV king is now faced with China-based competitors while its chief rival Samsung is gearing up large format quantum dot OLED (QD-OLED) panel production of its own.

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In the meantime, LG Display, which currently supplies almost all of the world’s OLED panels for televisions and also has long been a major supplier of LED-LCD panels used for TVs, said through an investors conference call Tuesday that it is taking steps to increase its focus on OLED panel production in the second half of the year. It now expects significant growth from its OLED sales in the third quarter and beyond as it expands panel production capacity.

Furthermore, LGD announced Tuesday its plans to make an additional investment of $2.5 billion in a Gen 10.5 OLED line in its P10 fab in Paju, Korea. The company said it will bolster its OLED leadership position with competitive OLED productivity as it continues its innovation in next-generation display technology that has most recently produced supersized, rollable and transparent displays.

Prior to the announcement, the company also was preparing volume OLED panel production at an 8.5 Gen plant in Guangzhou, China, according to Business Korea, as part of a solution to get around tough Japanese export restrictions on components sold into Korea.

“If we start mass production of the OLED factory in Guangzhou from the third quarter, the production capacity of OLED panels will double to the present level, and the performance of large OLED business will be strengthened,” said Dong-hee Suh, chief financial officer of LG Display.

Meanwhile, the 10.5-Gen fab in Paju is expected to help increase production efficiency by allowing LG to produce more TV sized screens from a single piece of mother glass.

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Dong-hee Suh added, “LG Display is the only company that has a wide OLED portfolio from small-sized wearables to large-sized TVs. Through stabilized small- and large-sized OLED production starting in the second half of the year, the company will increase its opportunities and change its business structure accordingly. As the large-scale investment into OLED that began in 2017 will come to an end this year, the company will respond faster and more flexibly to unexpected external variables in order to create meaningful performance starting from next year.”

The announcement was made as the company reported a widening of losses in the second quarter of 2019 due to weaker demand for its flat display panels. The company attributed some of that loss to troublesome economic conditions impacted by consumer and retailer concerns arising from trade tensions between the United States and China.

This hindered demand and orders for television sets, compounded by stockpiling supplies in the U.S. in the first quarter as a result of the threaten tariff actions.

According to IHS Markit data, global OLED TV unit shipments totaled 500,000 units in the first half of 2017, and rose 112% to 1.06 million units in 2018. Over the first half of 2019, IHS estimated shipments slowed to just a 20% increase for 1.27 million units in the period.

The company reported a net loss for the fiscal quarter at the end of June was 550.18 billion Korean won ($467.5 million), compared with a net loss of KRW300.54 billion in the same period last year. Second-quarter revenue fell 4.6% on year to KRW5.353 trillion.

LG said “panels for TVs accounted for 41% of the revenue in the second quarter of 2019, up 5% point from 36% thanks to the sales portion increase in OLED TV panels.”

LG’s announcement comes as rival Samsung Display is preparing to place an order for production equipment to begin making large-format QD-OLED panels (quantum dot-OLED hybrid technology) and shut down its LCD line at the Asan Campus in Cheonan South Korea to repurpose it for QD-OLED production in August, according to a report on web site BusinessKorea. The total investment figure will reach 2.5 trillion won ($2.15 billion) to nearly 3 trillion won ($2.58 billion), the report said.

LG is also facing the onset of large-format OLED panel production from Chinese competitors including China Star Optoelectronics Technology (CSoT) and BOE.

By Greg Tarr

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