China’s biggest display company called BOE is actively asking Korea’s major equipment companies for technical cooperation to secure next-generation display process technology. Not only it asked certain companies to establish partnership, but it also proposed M&A. Although one can secure China’s biggest source of demand if it works with BOE, there are also concerns about technologies being leaked.
BOE’s affiliate called ‘Xinihua’ is recently looking for partnerships targeting Korea’s major OLED equipment companies. Korea’s major OLED plating equipment companies such as WONIK IPS, STI, and AP System received proposals from Xinihua, and other small-sized companies including examining equipment companies are included as well.
Out of these companies, STI made a big progress and it is going to work with BOE starting from second half of 2015. Instead of technical cooperation, STI is working with Xinihua as an equipment purchase and distribution cooperative company.
A person affiliated with STI said that it decided to work with Xinihua as a new OLED product distribution partner and it definitely needs to pass through affiliate if it wants to deliver equipment to BOE. By looking at the situation, STI decided not to establish joint collaboration as of right now.
WONIK IPS and AP System are also considering proposals from Xinihua, but there aren’t any progresses yet.
A person in the industry is saying that it is a difficult decision for these companies because majority of them are major cooperative companies that supply equipment to Samsung Display and LG Display.
Korea’s equipment industry’s opinion regarding working with BOE is divided into two. There is a positive stance that it will provide opportunities for creating new markets, whereas some are being skeptical about it because they think that BOE will just use them for its own good and throw them away later if they are not needed anymore.
There is a lot of demand for current display equipment in China as it is about 90%. If they can secure stable market in China, they can secure abilities to strive for developing new equipment through increase in sales.
“One cannot protect its technologies just by doing nothing. Winning a contract with BOE will definitely serve as an opportunity for us when we are in a situation where we need to compete against Japan’s equipment companies to survive.” A person in the industry circle said about the importance of working with BOE.
Xinihua is a company that BOE established separately to localize equipment and it is putting all of its energy and effort to secure OLED CVD technology that is almost being monopolized by Korea’s equipment companies.
Another person in the industry circle said that BOE will simply demand equipment distribution at first, but there is a high chance that it will request technology relocation later. That person showed concerns about a possibility that China will come back to haunt Korea in the future.
“Instead of having a hostile relationship with China that has massive market, Korean companies need to come up with a strategy where both Korea and China can win. It is desirable for Korean companies to seek substantial cooperative relationship with China by give and takes through cooperation in certain technologies.” Professor Lee Shin Du of Seoul National University said that both companies need to work together to be in a win-win situation.
Staff Reporter Sung, Hyeonhee | sunghh@etnews.com