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Samsung Display's decision to terminate production of LCD panels at its plants in Korea and China before year-end 2020 is positive for demand and supply of large-size panels in 2021, and the move will also benefit rivals including China Star Optoelectronics Technology (CSOT), BOE Technology, Sakai Display Products (SDP) and AU Optronics (AUO), according to Digitimes Research.
It is no surprise to the display industry that Samsung Display will opt to withdraw from the LCD panel sector as its LCD business was losing money in every quarter of 2019 due to challenges from Chinese competitors' aggressive capacity ramp.
LCD panel prices did stage a rally in early 2020 but the upswing was capped in March by the coronavirus pandemic, which has also undermined consumer demand for TVs, pushing Samsung Display to accelerate its exit from the LCD panel sector.
Samsung Display had 14.4% of the world's large-size LCD panel production capacity in 2019, including 11.1% in Korea and 3.3% in China.
The Korean panel maker is currently operating an 8.5G line in Suzhou, China, and the company is likely to sell it to China-based companies, such as CSOT, which would narrow its capacity gap to rival company BOE if it acquired the plant.
Digitimes Research believes that CSOT, BOE and SDP (including Sakai SIO International Guangzhou) will benefit from Samsung Display's exit as these three firms all boast 10G or above LCD lines.
AUO has maintained long-term business relationships with Samsung Display in TV panel segment though the two firms are competing each other for panel orders from the gaming monitor segment. AUO stands a good chance of ramping up gaming monitor panel shipments once Samsung Display stops producing LCD panels.