BOE was kicked out of the supply chain by Samsung?

According to a recent report by South Korean media BusinessKorea, due to the uncertainty of ongoing patent disputes and Sino-US tensions, Samsung Electronics is cutting off its partnership with China's display leader BOE and restructuring its supply chain. BOE's latest response to this report was denied and said it was "a report taken out of context based on false information".

Samsung Electronics kicked BOE out of the supply chain?

According to South Korean industry sources,BOE is no longer the top three suppliers of Samsung TV panels in the third quarter of this year,And the market share has also begun to decline。 In the first half of this year, Samsung purchased about 10% of its total TV panel purchases from BOE, ranking third among Samsung's major TV panel suppliers.

Samsung's third-quarter earnings report shows that Samsung has removed BOE from the list of major suppliers of TV and display screen device panels in the Device Experience (DX) division, which is also the first time since the fourth quarter of 2015.

South Korean industry sources revealed,Samsung and BOE in the mobile phone panel cooperation has ended;As for TV panels,Due to the panel factory actively raising the price of TV panels,Bring great cost pressure to Samsung,The relationship between the two sides is also relatively tense。 Samsung is expected to increase its cooperation with other suppliers, including LG Display (LGD), Japan's Sharp, and AUO.

Industry insiders said,For next year's TV panel procurement allocation,Samsung intends to increase the procurement ratio of Japanese manufacturers、Taiwanese manufacturers and South Korean manufacturers,But considering the large production capacity of Chinese panel factories、Some sizes have production advantages,It is not completely cut off cooperation。 At present, Chinese panel manufacturers still have an absolute advantage in global production capacity allocation, and they are also working hard to repair customer relationships, and AUO's TV panel production capacity may not be able to fully meet customer needs. In preparation for Samsung's supply chain restructuring, LGD expects to increase capacity utilization at its LCD plant in Guangzhou, China, with shipments increasing from 9 million units this year to 16 million units next year.

BOE response: taken out of context

In response to the South Korean media's report that "Samsung Electronics kicked BOE out of the supply chain", BOE responded, "The recent rumors about the cooperation between BOE and Samsung are Korean media reports taken out of context based on false information." BOE's supply to global brand partners is still progressing in an orderly manner as currently planned. ”

According to BOE's latest financial report, the revenue in the third quarter of this year was 46.337 billion yuan, a year-on-year increase of 12.65%, and the net profit attributable to shareholders of listed companies was 286 million yuan, a year-on-year turnaround. In the first three quarters, BOE A achieved operating income of 126.515 billion yuan, down 4.69% year-on-year, and net profit attributable to shareholders of listed companies of 1.022 billion yuan, down 80.68% year-on-year.

The conflict between Samsung and BOE has intensified

The reason why Samsung plans to sever its medium- and long-term partnership with BOE is mainly because its subsidiary Samsung Display (SDC) is caught in a patent infringement lawsuit with BOE.

Looking back at the history of BOE and Samsung, in fact, the two sides were close technology partners at first. In the first quarter of 2018, BOE reached an exchange cooperation with Samsung, obtained AMOLED technology transfer, and entered the field of small-size LEDs. In 2020, Samsung Display announced that it would abandon the traditional LCD panel production line and fully turn to OLED and QD-OLED display panel production, and then expanded the outsourcing of LCD, BOE became one of the important suppliers. However, since 2022, the contradictions between the two sides have gradually become public.

In July 2022, media reports showed that Samsung demanded that BOE pay about 100 billion won (about 510 million yuan) in royalties if they wanted to advertise "providing liquid crystal display panels (LCDs) to Samsung." However, BOE refused to pay, and Samsung then began to reduce the amount of purchases from BOE.

In November 2022, the names of 10 companies, including BOE and Innolux, have been removed from the supplier list in the "2022 Supplier List" released by Samsung Electronics. It should be added here that Samsung Electronics only publishes a list of companies that have agreed with its partners, which account for 80% of the purchase value of accessories. Also, at the request of the supplier or the Samsung Electronics procurement team, some suppliers may not be included.

△ Gray is the deleted company, source: The Elec

In late 2022, Samsung also filed a complaint with the U.S. International Trade Commission (ITC) against 17 smartphone repair shops in the U.S., citing the procurement of specific "illegal" display panels to repair Samsung's Galaxy series phones and Apple's iPhone series phones. Samsung claims that the products infringe on its intellectual property rights, including its "diamond pixel" technology, which uses a diamond-shaped arrangement of red, blue, and green pixels to optimize the visual clarity of OLED display panels. In response, the ITC launched an investigation into BOE, although Samsung's complaint did not mention a specific display supplier. There are reports that this may be related to the "blue diamond" pixel arrangement f-OLED screen launched by BOE in August last year.

In the face of Samsung's pressure, BOE then also counterattacked. In the first half of this year, BOE Technology Group Co., Ltd. and its subsidiaries Chongqing BOE Display Technology Co., Ltd. and Chengdu BOE Optoelectronics Technology Co., Ltd. sued a number of Samsung affiliates, including Samsung Display Co., Ltd., Samsung (China) Investment Co., Ltd., Shanghai Samsung Semiconductor Co., Ltd., Samsung Semiconductor (Xi'an) Co., Ltd., Tianjin Samsung Vision Mobile Co., Ltd., Dongguan Samsung Vision Co., Ltd., and Chongqing Jingdong Jiapin Trading Co., Ltd.

In November of this year, Samsung Display filed an ITC complaint directly against BOE for the first time.

According to statistics, as of December 2022, among the 80,000 independent patents applied for by BOE, more than 28,000 flexible OLED-related patent applications have been filed, accounting for more than one-third. According to previous forecasts, in 2022, Samsung and BOE occupy the first and second places with a share of 36% and 21% respectively in the global flexible OLED production capacity.

In addition, IDC data shows that in the global large-size panel market, the global market share of TV panel manufacturers from Chinese mainland has been stable at around 70% for a long time. Among them, BOE is currently the world's largest manufacturer in this field, with a market share of 32.8%, while Innolux, TCL Huaxing, HKC Huike, AUO, and LGD ranked second to sixth respectively. In addition to Chinese manufacturers, other large manufacturers have reduced their investment in the LCD field, and the combined market share of panel manufacturers in Japan and South Korea is only 10.4%.

Editor: Xinzhixun-Rogue Sword