Behind the continual delay, the immediate interests must be involved.
Since Samsung postponed the LCD panel stop time from the end of 2020 to before March 2021, recently, according to foreign media reports, Samsung Display (SDC) has decided to shut down the LCD panel production line in Korea at the request of the group. Postponed to November 2021. This delay will increase the output of 4 million LCD TV panels to make up for part of the supply gap.
Strong demand for LCD panels
As early as April this year, Samsung Display announced that it would stop producing LCD panels at the end of 2020. Samsung Display believes that LCD screen technology has matured and panel supply is oversupply, and its follow-up will focus on QLED (quantum dot) technology and OLED-related technologies.
It is understood that the production lines that Samsung Display plans to shut down involve three large-size LCD panel factories in South Korea and the 8.5 generation line in Suzhou. In 2019, SDC's large-size LCD production area of 7th generation or more in South Korea accounted for approximately 12.2% of the world's total. Together with the 8.5-generation line in Suzhou, the proportion reached 15.7%.
However, due to the stimulation of the new crown epidemic, long-term home life has become the norm for people. Under this circumstance, the sales of TVs have gradually risen, and the demand for panels has exploded, making the supply of panels in short supply and driving up the price of panels.
According to Qunzhi Consulting data, since the third quarter of 2020, LCD panel prices have continued to rise. In late December, the prices of 32-inch to 75-inch TV panels increased by US$2 to US$5 from the previous period.
According to Qunzhi Consulting's forecast, by January 2021, 32-inch TV panels will maintain an increase of 2-3 US dollars, and the supply of 50-inch panels will continue to be in short supply. In January 2021, it may rise by 4 US dollars, 55-inch and large-size panels. It will reach 5-6 US dollars.
Under such a strong trend, Samsung, as the leader in the TV manufacturing industry, will naturally not let this opportunity pass. According to Xie Qinyi, senior research director of Omdia, Samsung is one of the biggest beneficiaries of TV sales this year. The sales target in 2021 is more aggressive and will challenge the shipment of 50 million units.
It also shows that Samsung is optimistic about the status quo of LCD panels. Due to Samsung's layout in OLED and QLED, there is no strong dependence on LCD production. Therefore, once LCD panel prices drop, Samsung is also likely to shut down LCD production again and switch to research on higher display technologies.
Benefits are only the reason for Samsung’s minimal delay
Of course, although the benefit from the increase in LCD panel prices is the reason for Samsung's delay in closing the production line, it is not the most important factor.
At present, although Samsung's color TV market share has ranked first for years, the pressure brought by Chinese color TV brands cannot be underestimated. TCL has grown into the world's largest color TV company except Samsung. Hisense has also put a lot of pressure on foreign brands through its advanced technology, brand and marketing advantages.
Compared with Chinese brands, Samsung's biggest advantage is the panel business. The most important supply chain system for color TV manufacturing has been opened up only by oneself. However, as Samsung no longer attaches importance to LCD panel production, gradually reduced LCD panel production capacity and sold the Suzhou 8.5-generation factory to Huaxing Optoelectronics, Samsung no longer has an absolute advantage in LCD panel production.
It is precisely because of Samsung's reduction of production capacity and the impact of the epidemic that the demand for panels has increased significantly. This also allows Chinese panel manufacturers led by TCL and BOE to continuously release production capacity. Under this situation, the dominant position of Samsung's color TV will also be shaken.
Therefore, Samsung's color TV business delayed the closure of LCD panel factories. On the one hand, use their own perfect industrial chain structure to get rich benefits. On the other hand, the delay in closing the factory will not affect Samsung's expansion and progress in new business. For Samsung, the delayed shutdown will not cause harm to Samsung's color TV business, but can disrupt some of the established deployments of its opponents.
Samsung, which predicts that there are still many market opportunities for LCD in the future, will certainly not rush to close the LCD factory. This is the real attribute of capital pursuit of profit.
