Analysts in South Korea have warned there could be a shortage of large-sized OLED TV panels within the next three years if LG Display doesn’t act soon to ramp up production.
The warning came from UBI Research Chief Executive Choong Hoon Yi, who told media his forecast is based on the existing production capacity for OLED TVs and expected demand in the future.
Yi said demand for OLED TV panels will hit 7.2 million units this year, rising to 10 million by 2023 and then 12 million in 2024, The Elec reported. That would be when the problems start, he said, as LG Display, which is the world’s only producer of larger OLED display panels used for televisions, has the capacity to manufacture just 10 million units per year.
LG Display currently operates two OLED TV panel production lines, in Paju, South Korea and in Guangzhou, China.
Yi said if LG Display doesn’t move to increase capacity at one of those facilities soon, it won’t be able to keep up with demand due to the time it will require to implement those changes.
LG Display said in January 2020 that it’s planning to expand its production line in Guangzhou to Gen 10.5 in 2023, which would enable it to manufacture 2940x3370mm subtrates. At present, the Guangzhou facility runs a Gen 8.5 production line that makes 2200x2500mm substrates. The larger Gen 10.5 substrates can be cut into eight 65-inch panels or six 75-inch panels. The Gen 8.5 substrates are currently cut into six 55-inch panels and three 65-inch panels.
But to ensure it can meet forecast demand, LG Display will need to begin investing in its Gen 10.5 line in Guangzhou no later than next year, Yi said. That’s because it will take time for the company to secure the necessary yield rate, due to its lack of experience in using such large substrates in production, the analyst explained.
Alternatively, Yi said, LG Display could opt to upgrade the existing Gen 8.5 lines in Guangzhou and Paju to boost production capacity to meet forecast demand.
However, rumoured developments in the industry could yet pressure LG Display to move more quickly. As Yi explained, his demand forecast is based on numbers from LG Electronics, Sony, Philips, Panasonic and other existing OLED panel customers. But in April reports emerged that Samsung Electronics was negotiating with LG Display to purchase “millions” of OLED TV display panels due to the shrinking profitability of its premium QLED TVs.
Samsung, which has until now resisted OLED technology in favor of QLED, which combines older LCD technology with quantum dots, has reportedly seen its TV profits slump over the last year. The rising costs of LCD panels have made its QLED TVs less profitable, forcing it to consider selling OLED TVs instead.
It’s not clear if Samsung will indeed start purchasing millions of OLED panels, but if it does, Yi said LG Display will need to begin expanding capacity at its facilities as early as this year in order to meet demand.
The company has already ramped up production considerably since the Guangzhou facility came online in the third quarter of last year. During the second quarter of 2021 LG Display produced 1.8 million large-sized OLED panels, Yi said, up 186% from the same quarter of 2020.
OLED TV production is already said to be under threat from a potential shortage of processor chips resulting from COVID-19 pandemic-linked disruption to the semiconductor industry.
