Shenzhen Enrich Electronics Co.,Ltd

 

Because China's LCD panel makers have absolute dominance of production capacity and its huge market share, Samsung Electronics is at a disadvantage in every price negotiation, as it has no reason to fight against the Chinese company's price hike demand in the trend of peak season stocking and cycle rebound.

 

Since the beginning of 2023, global suppliers have raised the prices of their TV LCD panels by more than 30 percent amid the industry's rebound in the cycle, according to industry news reports.

 

In order to avoid remaining passive during LCD panel procurement negotiations, Samsung Electronics is expected to increase LCD panel orders from manufacturers such as South Korea's LGD and Japan's Sharp, and reduce the share of orders from Chinese manufacturers in order to save procurement costs.

 

It is worth mentioning that South Korea's LGD and Japan's Sharp in the last year because of the impact of the industry's weak cycle and a huge deficit. In order to reverse the loss situation, LGD has even intended to Guangzhou's 8.5 generation LCD production line (LGD CA plant) for sale; Sharp has also been the majority shareholder of the Hon Hai Group's second "urge", so that it will make the deficit repair program as soon as possible.

 

Under these circumstances, Samsung Electronics is expected to LGD and Sharp LCD panel order negotiations, will be able to control the price initiative.

 

According to the Korean media, Samsung Electronics has planned to reduce China's LCD panel procurement ratio from 70% to 50%, reducing part of the order will be LGD and Sharp's Sakai plant (SDP) to undertake.

 

LGD and Sharp's share of orders hovered around 10%, so it is expected to use this to double the orders for LCD, and have a positive impact on its earnings recovery.

 

KB Securities researcher Kim Dong-won has said that, assuming the future of Samsung Electronics LCD TV supply chain restructuring, LGD's supply will be close to 7 million units per year, which is expected to more than double the previous level, and this will have a positive impact on the improvement of LCD TV panel production line utilization rate.

 

In addition, Kim also said that LGD will start from the third quarter of this year to Samsung Electronics supply 77-inch and 83-inch OLED panels, it is expected that LGD will be to Samsung at the same time the supply of LCD and OLED panels. And if the subsequent cooperation between the two sides is stable, LGD also do not have to Guangzhou's 8.5 generation LCD plant to find buyers, sold at a discount.

 

It is worth mentioning that LGD is currently restructuring its large LCD panel business, the company has completely closed the local LCD production plant in South Korea last year, and will be 8.5 generation LCD production line in Guangzhou capacity cut in half, so in the short term will not be able to increase the panel supply of LCD for Samsung Electronics. Samsung Electronics is expected to part of the LCD orders will flow to Qun Chuang, AUO and other Taiwan-based manufacturers.