Why Samsung Is Using LG’s LCD Panels For New TVs

Samsung Electronics is reportedly planning on debuting new television models that are equipped with LG Display’s LCD screens next year. The neighboring rivals are apparently close to sealing an agreement after discussing matters regarding the partnership since last year.

On Monday, The Investor learned that Samsung could be outfitting its new TV models with LCD displays from LG. The devices are predicted to make their debut next year, and as per a local source the total shipment is expected to remain at 100,000 units only.

“The talks between Samsung and LG that have continued over the past year are being finalized now,” an unnamed industry source disclosed to the Korean media. “Samsung’s TV sets using LG panels are likely to be launched early next year. The shipment may not exceed 100,000 units.”

Earlier local reports predicted that the deal between Samsung and LG could possibly lead to the production of an estimated 700,000 LCD TV units. However, the lower figure is now seen as Samsung’s way of reducing its dependence on its rival. It also doesn’t hurt that LCD shortages have eased lately.

Another reason why Samsung is only ordering 100,000 units from LG could be the prediction that the former’s shipments of large TVs could decline next year. LG is believed to be supplying LCD panels for the 40- to 60-inch Samsung TVs. And a source has said, “As TV sizes get bigger and bigger with higher picture quality, Samsung’s LCD TV shipments are forecast to decrease, while the company is seemingly lowering its target sales.”

The partnership between the crosstown competitors came to be when Japanese LCD maker Sharp informed Samsung that it has cut its supply of LCD panels for the latter. Sharp reportedly disclosed the supply cut abruptly without providing clear reasons why this happened. However, there were rumors that Sharp’s new owner, Foxconn Technology Group of Taiwan, decided to cut Samsung’s supply in favor of its own TV production, as per Korea Herald.

Sharp usually manufactures 5 million LCD screens per year for Samsung’s television business, totaling about 10 percent of the Korean company’s annual TV production. This year, Samsung increased its order to 6 million units of LCD panels. Due to the supply cut, Sharp could only cover 3 million LCD panels.

Samsung, as the world’s largest TV maker, opted to seek help from other LCD panel manufacturers, including LG Display. Industry sources think this is a rare occasion for the two rivals, who have been competing in almost all appliance and component sectors globally.

In fact, the rivalry between Samsung and LG may have contributed to the delay in the agreement. The decades-old bitter competition between the two reportedly stalled the talks over the past year. The difference in their display manufacturing technologies also contributed to that delay.

“Samsung needs to adjust its production line for LG panels that use different manufacturing technologies. They have been narrowing differences in the total shipment that is directly linked to production costs,” a source divulged on condition of anonymity.

As for the remaining units it needs for its new TV models, Samsung is said to have tapped other companies. Industry sources claimed the Korean giant is getting its other LCD supplies from Chinese display makers like BOE. Samsung, after all, ships around 45 million units of TVs each year.