First, South Korea's OLED panel hegemony is in jeopardy
In recent years, in the context of increasingly fierce competition in the global smartphone market, the key component of mobile phone screen has become the focus of competition among major manufacturers. In particular, OLED panels have become the mainstream choice in the smartphone market due to their better image quality, lower power consumption and more flexible application prospects than LCD panels.
For a long time, in the field of OLED panels, Korean companies have always occupied an absolute advantage. With its technology and production capacity advantages, Samsung has almost monopolized the global OLED panel market, and its market share has been as high as 88% since the fourth quarter of 2019. In addition to Samsung, LG Electronics is also at the forefront of the industry in the field of OLED panels, providing core panel accessories for well-known brands such as Apple and Sony.
However, the situation is changing quietly but dramatically. With the rapid rise of China's OLED panel companies, the hegemony of South Korean companies in this field is being challenged like never before.
China's domestic mobile phone manufacturers' reliance on OLED panels is rapidly declining. According to the latest data from the Korea Display Industry Association, the proportion of Chinese mobile phone manufacturers' purchases of South Korean OLED panels in 2023 has dropped sharply from 77.9% in 2021 to only 16%. The pace of change has raised concerns about the prospects of Korean companies in this area.
Undoubtedly, behind this trend is the result of Chinese OLED panel manufacturers continuously strengthening their independent research and development capabilities and continuously grabbing market share. BOE, Huaxing Optoelectronics and other leading enterprises are rapidly expanding production capacity, improving product performance, and gradually catching up with Samsung, LG and other Korean manufacturers in terms of quality and cost, so as to replace a large number of imported OLED panels.
It can be said that this "offensive" launched by Chinese OLED panel manufacturers is fundamentally changing the pattern of the global OLED panel market. Although South Korean companies such as Samsung and LG still occupy orders from international brands such as Apple and Sony with their technology and scale advantages, once they lose China, the world's largest smartphone market, their leading position in the field of OLED panels is bound to be difficult to maintain.
Second, the internal driving force of the rise of China's OLED panel industry
What are the internal driving factors behind the fact that China's OLED panel industry can achieve a breakthrough at such a fast speed?
The first is the promotion of technological innovation. In recent years, under the great attention and capital investment at the national level, Chinese OLED panel companies have increased their independent research and development efforts, continuously optimized the production process, and significantly improved product performance indicators. According to the data, between 2011 and 2020, China's patent applications in the field of OLED reached 26% of the global total, second only to South Korea. This fully reflects the rapid increase in the technological strength of Chinese enterprises in this field.
The second is the role of industrial policy support. The Chinese government attaches great importance to the development of the OLED industry and has formulated a series of supporting policies. For example, in the "14th Five-Year Plan", new display technologies such as OLED and micro LED are clearly listed as key support areas, and it is proposed to significantly increase the localization level of related products by 2025. Under this policy incentive, Chinese OLED companies have increased production capacity investment and accelerated technological innovation, which has made the entire industrial chain develop rapidly.
Moreover, the boosting role of capital cannot be ignored. In recent years, China's capital market has continued to invest in the OLED industry, providing strong financial support for enterprises' technological breakthroughs and business expansion. At the beginning of 2023 alone, BOE announced an investment of 63 billion yuan to build the first 8.6 generation AMOLED production line in China. This large-scale capacity expansion has undoubtedly won more market share for Chinese OLED companies.
In addition, Chinese OLED companies also pay great attention to market development. With the rapid rise of domestic mobile phone brands, BOE, Huaxing Optoelectronics and other enterprises keep up with customer needs, continuously optimize product performance and cost performance, effectively meet the procurement needs of domestic brand manufacturers, and quickly seize the market share that was originally monopolized by Korean enterprises.
It can be said that the combined effect of multiple factors such as technological innovation, policy support, capital promotion and market development has enabled China's OLED panel industry to achieve rapid development. From shackles to leadership, this transformation undoubtedly marks the rise of Made in China in key high-end fields.
3. The response strategies of Korean companies and their limitations
In the face of the rapid rise of China's OLED panel industry, Korean companies are obviously feeling great pressure. In order to maintain their dominance in this field, major Korean manufacturers are taking a series of countermeasures.
Among them, Samsung and LG, the two leading companies, are particularly active. Samsung recently announced an investment of up to 4.1 trillion won in Tangjing, South Korea, to build a new OLED production line, which is scheduled to start production in 2026, in order to secure its competitive advantage in the OLED panel market. LG, on the other hand, has invested 3.3 trillion won in the Paju plant to build a new sixth-generation mid-size OLED panel production line, which aims to consolidate its dominant position in international brands such as Apple and Sony.
At the same time, the South Korean government is also "supporting" domestic manufacturers. According to the Korean Intellectual Property Office (KIPO), between 2011 and 2020, South Korea accounted for 43% of the world's patent applications in the field of OLED, ranking first. This undoubtedly provides strong support for Samsung, LG and other companies to consolidate their technological advantages.
However, while South Korean companies are doing their best to meet this challenge, the fundamental solution is not encouraging.
First of all, as a latecomer, China's OLED enterprises are catching up at a very fast speed, and their technical strength and production capacity advantages are rapidly increasing. In contrast, the existing advantages relied on by old giants such as Samsung and LG are gradually disappearing, and it is difficult to achieve qualitative breakthroughs in the short term.
Secondly, the development of China's OLED industry has been strongly supported by policies, capital and other aspects, and this systemic advantage is difficult to be replaced by a single enterprise. Even if Samsung and LG temporarily maintain their technological leadership, it is difficult to maintain their competitiveness for a long time without extensive industrial ecology and market support.
Thirdly, Chinese OLED companies are entering the international market in a big way. With the continuous optimization of product performance and cost, they not only seized a large share in the domestic market, but also began to make breakthroughs in overseas markets. For example, BOE has become a panel supplier for many international mobile phone brands. This kind of all-round market offensive has undoubtedly made the foothold of Korean companies smaller and smaller.
Overall, while South Korean companies are doing their best to cope with the rise of China's OLED industry, the fundamental solution is still not optimistic. In the short term, they may be able to temporarily retain market share with their existing advantages. However, in the medium and long term, if it fails to make breakthroughs in technology, industrial chain, market development, etc., its leading position in the global OLED panel market will eventually be in jeopardy.
Fourth, the future development prospects of China's panel industry
In the face of increasingly fierce market competition, how should Chinese OLED panel companies plan for future development paths?
The most important thing is to continue to increase independent innovation and continue to improve product performance and production process level. BOE, Huaxing Optoelectronics and other companies have made phased breakthroughs in the field of OLED, but there is still a certain gap compared with the international leading level. Therefore, it is necessary to further strengthen basic R&D investment, cultivate high-end R&D talents, and continuously promote technological innovation.
At the same time, enterprises also need to pay close attention to changes in market demand and actively adapt to the development trend of downstream application scenarios. With the continuous maturity of new technologies such as micro LED and flexible OLED, OLED panels will develop in the direction of higher parameters and more flexible applications. Chinese manufacturers should take the initiative to study cutting-edge technology routes and accelerate product iteration in order to gain an advantage in the fierce market competition.
On the other hand, efforts are also needed in the integrated development of the industrial chain. At present, there are still some weak links in China's OLED industry chain, such as the self-sufficiency of key raw materials and equipment needs to be improved. Enterprises should work closely with upstream and downstream partners to jointly improve the industrial chain and improve their overall competitiveness.
At the same time, Chinese OLED companies also need to accelerate the pace of international market development. While consolidating the domestic market share, it is necessary to actively expand overseas business and actively serve international well-known brand customers. Only by continuing to expand market share on a global scale can China's OLED industry truly establish its dominant position.
Of course, continued support at the government level is also crucial. In the future, the government should continue to introduce targeted industrial policies to provide stronger policy incentives in key technology research and development, capacity expansion, and industrial chain improvement. At the same time, it is also necessary to intensify the protection of intellectual property rights and create a more favorable environment for innovation and development.
In general, systematic measures in technological innovation, market development, industrial layout, etc., will further enhance the strength and competitiveness of China's OLED industry. With these efforts, Chinese OLED companies are expected to achieve a comprehensive catch-up with Korean manufacturers in the next 5 years, and eventually dominate the global OLED panel market.
Undoubtedly, this transformation will have a profound impact on the entire global display industry. The rise of China's OLED industry not only marks the realization of catch-up in key high-end areas of China's manufacturing, but also will bring new changes and reshuffles to the global consumer electronics market. Let's wait and see what happens!