Samsung postpones planned exit of global LCD market

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Samsung to stop producing LED screens by end of 2020.

Samsung will continue manufacturing liquid crystal display (LCD) panels even though it declared its intention to exit the market earlier this year. The South Korean conglomerate reversed course after experiencing a surge of television and computer monitor purchases following the COVID-19 outbreak. The firm tasked its domestic production facilities with making LCDs for an unspecified amount of time.

Because of the corporation’s size, its change of plans will have an industrywide impact.

A Sensible Pivot

In March, Samsung announced it would stop manufacturing LCD products and direct its resources to more sophisticated technologies. It committed to the change by selling off its last remaining Chinese LCD factory in November. As the firm developed groundbreaking electronics panel devices like active-matrix organic light-emitting diode (AMOLED), the move made sense.

But like the rest of the world, the company altered its plans in the wake of the coronavirus pandemic.

Research group TrendForce found worldwide demand for TV and laptop panels surged by 30 percent annually in the third quarter. Homebound consumers looking to upgrade their personal entertainment and business equipment for the post-pandemic life drove the change. That market development helped Samsung’s display division bring in $6.7 billion in Q3, up 18.61 from Q2.

Since the conglomerate expects LCD demand to remain robust in Q4, it would have been foolish to shutter its domestic production lines as scheduled.

That said, the manufacturer has not committed to a wholesale change in strategy. The firm’s display unit will keep making LCD products for its electronics division, but only as long as it is profitable. It is fully committed to pushing the sector forward with its quantum dot (QD)-OLED technology rollout in the first half of 2021.

As innovation is one of its core strengths, Samsung is wise not to make a long-term commitment to outmoded technology.

Wider Industry Impact

Although Samsung’s decision to remain in the LCD business is temporary, the move is directly affecting two of its Chinese panel vendors.

At present, BOE Technology sells the majority of its TV panels to Samsung. The firm likely anticipated increasing its sales to the South Korean conglomerate to increase after it exited the LCD market. But the corporation will not see a spike in sales in the near term because its client shifted its priorities.

Similarly, China Star Optoelectronics Technology (CSOT), a TCL Technology Group subsidiary, reportedly expected to supply Samsung with more monitor components next year. In fact, CSOT bought out its customer’s stake in a Suzhou LCD factory ahead of the transition. However, the organization is unlikely to realize its revenue growth ambition until Samsung resumes its business reorganization.

BOE and CSOT signaled a shift had occurred earlier this month when they revealed plans to discontinue their LCD development and production capacity expansion.

Ultimately, DigiTimes predicts Samsung postponing its exit from the LCD sector will not affect the global market. Since the firm’s display unit produced panels for its electronics division, global component availability will not be constrained. Also, BOE and CSOT’s growth forecasts will probably need to be delayed rather than scraped. But it is worth remembering that when a global corporation changes tact, the wider industry always feels the aftershocks.

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