SEOUL (Reuters ) - South Korea’s LG Display Co Ltd is expected to start supplying high end TV panels for Samsung Electronic Co Ltd as soon as this quarter. This deal would help Samsung Electronic Co Ltd, a flat-screen manufacturer that has been losing money, turn profitable.
Two sources who have direct knowledge of this matter stated that LG Display plans to ship 2 million units to Samsung next year, and then increase shipments to 3 and 5 millions units in the following years. Samsung will likely receive 77-inch or 83-inch OLED TV panels in the first shipment.
The deal shows that Samsung is expanding its high-end Organic Light Emitting Diode (OLED), TVs, as the competition with Chinese vendors heats up at the lower end. OLED panels are nearly five times as expensive as liquid-crystal displays (LCD).
Samsung may be able to surpass Sony Corp. as the world's second largest OLED TV supplier with this deal.
Analysts speculated that LG Display had been in discussions to supply OLED panels to a client. Reuters was the first to break the news of this deal.
The deal was not made public, so all sources refused to be identified.
Samsung Electronics and LG Display both declined to comment.
Samsung Electronics has been slower to adopt OLED TVs than its local rival LG Electronics Inc. This is partly because of the high price of panels.
Analysts estimate that LG Display will see a significant boost in its sales with the shipment of 2 million OLED panel. This is worth at least $1.5billion and represents around 20-30% of their total production capacity for large OLED panels.
Due to limited customers, the company is running its OLED plant below capacity. The surge in demand for new TVs that was fueled by a pandemic has slowed down due to rising inflation and a slowing economy.
LG Display provides OLED TV panels for LG Electronics, Sony and Sony. Apple Inc. also uses its smartphone displays.
Samsung Electronics' display unit Samsung Display specializes in OLED screens, which are used on mobile phones from Apple and Samsung.
According to Omdia, a market research company, Samsung has a market share of 6.1% in OLED TVs, trailing LG Electronics at 54.6%, and Sony at 26.1%.
Omdia predicts that the market will grow by nearly 6% this year to $11.7 billion and then to $12.9 billion in 2027.