Samsung Doubles Down On Display Panels Amid Rumors Apple Will Use OLED For IPads, MacBooks
At a time when sales of smartphones and memory chips have been stagnating, Samsung, which is controlled by billionaire Jay Lee, the second richest man on the most recent list of Korea's 50 richest people, is doubling down on its technology operations.
Samsung Display, the Samsung Electronics unit that Lee took over as executive chairman in October, announced earlier this month that it plans to invest $3 billion over the next three years to produce advanced organic light-emitting diode (OLED) displays used in tablets. and other devices. .
The investment announcement comes amid reports that Apple, one of Samsung Display's biggest customers, plans to use OLED panels in iPads and MacBooks as early as next year, which analysts say will help speed up the transition away from older liquid crystal technology. : .
"Samsung Display is now taking active steps to invest, because when Apple starts using OLED screens for tablets and MacBooks, the trend will shift to OLED panels, just like what happened with smartphones when American companies started using them in your iPhone," said Kyuha Lee, an analyst at NH Investment & Securities "Despite the current sluggish IT market, once Apple starts using these displays, demand will only increase."
The company plans to upgrade its production line at its Asan factory in southern Seoul to increase production of large-size OLED screens that can be used in tablets and laptops. This will allow Samsung Display to double its screen output from 14.3 inches to 10 million by 2026. Currently, OLED panels are only used in premium tablets manufactured by Samsung Electronics and others.
Demand for OLED screens soared when Apple started using panels in iPhones in 2017 with the iPhone X. We can expect a similar change when the world's most expensive company installs these panels in iPads because of Apple's sales. tablets ahead of Samsung. iPad shipments rose 7 percent last year to 61.8 million units, making it the only company in the top five to post growth, according to industry tracker IDC. Samsung Electronics followed with 30.3 million units, 0.8% less than last year.
Apple has ordered an unnamed South Korean display company to develop two types of OLED panels for the iPad and two more for the MacBook, the Korean Electronic Times reported in January, citing industry figures such as Stone Partners. Specifically, they're 10.86 inches and 12.9 inches for the iPad, corresponding to the dimensions of the iPad Pro, and 14 and 16 inches for the MacBook, which are on par with the MacBook Pro, according to the report. The report adds that Apple could start using OLED displays for iPads in 2024 and MacBooks in 2026.
Demand for electronics has fallen since the end of last year as inflationary pressures and economic uncertainty reduced consumers' desire to buy gadgets. However, demand for high-end products is likely to persist.
“We are changing the dynamics of the market,” said Anuropo Natarai, senior analyst in IDC's mobile and consumer tracking division. “While affordability and ease of use will remain key drivers of market stability, consumers are also starting to appreciate the importance of premium devices in their purchasing decisions. As a result, vendors must focus on expanding their tablet portfolio."
With its latest investment, Samsung Display aims to strengthen its leading position in the OLED display market and widen the gap with Chinese competitors such as BOE Technology Group. The iPhone's OLED panels are supplied by Samsung Display, BOE and LG Display, part of billionaire Ku Kwan Mo's LG conglomerate.
However, there are concerns that overall demand for OLED panels will remain weak due to global economic uncertainty.
Demand for OLED screens for smartphones will not fully recover in the first half of 2023, although demand for LCD screens is showing signs of recovery, according to research firm Omdia. "While the LCD recovery is noteworthy and will clearly help support LCD prices and capacity utilization at the same time, OLED will have to wait for a further recovery in demand for high-end consumer electronics," said David Hsieh, senior director of research. . At Omdia. .
Despite weak demand, Samsung Display is using this opportunity to strengthen its leading position in the market. It also comes as the South Korean government is encouraging companies to invest in facilities and research, especially in their displays, semiconductors, electric vehicles and batteries, to help boost the country's economy, whose exports fell for a sixth straight month in March.
"The government will expand incentives so that companies can invest at the right time," South Korean President Yoon Suk-yeol said while attending an investment deal between Samsung Display and other makers of materials, parts and equipment earlier this month. "We also offer research and development support for the development of OLED technology."
Samsung Display expects its expansion to create around 26,000 new jobs. South Korea's Ministry of Commerce, Industry and Energy has announced it will increase incentives, provide financial support and other measures to help South Korean companies maintain their dominance in the OLED panel market.
Analysts said more investment for Samsung Display could be planned as Apple is expected to launch high-end devices soon. The South Korean company is the biggest manufacturer of foldable screens as Samsung Electronics dominates the foldable market after launching the first product of its kind in 2019.
"Although Samsung Display's latest investment does not include an investment in flexible displays, it will be made at the right time," said Lee of NH Investment & Securities. "Samsung Display is investing to keep pace with the market."
