LG and Samsung Close to Having Their First Ever Cross Purchase

Dec 11, 2017

LG Display is going to supply its 65-inch and 75-inch LCD TV panels to Samsung Electronics’ VD Business Department sometime during this month. This will be the first time when Samsung and LG are going to purchase each other’s products for TV and display markets. Although discussion about cross purchase between two businesses started under the leadership by South Korean Government, every discussion was foundered. It will be interesting to see if first ever cross purchase between Samsung and LG will lead to other departments as well.
According to industries on the 10th, LG Display is going to supply 65-inch, 75-inch, and 32-inch LCD TV panels to Samsung Electronics’ VD Business Department sometime during this month. Although this cross purchase was initially centered on 40-inch panels, plan has changed as Samsung Electronics has decided its 65-inch and 75-inch products to be its main models for 2018.
Samsung and LG pushed for cross purchase of panels in 2008 and 2009 in order to expand mutual cooperation amongst industries. Even South Korean Government came forward to help with cross purchase. However Samsung and LG could not come to an agreement due to many reasons such as specifications of technologies and procurement of supplies.
Growth of 55-inch and 65-inch TVs has become noticeable within global TV markets. 55-inch TVs have become generalized while 65-inch TVs have made sharp growth. It is expected that 65-inch TV markets will grow even more in 2018 and that markets for 75-inch TVs and TVs that are bigger than 75 inches will also start to grow.
It seems that Samsung Electronics has come up with a plan that will lead growth of markets for TVs that are bigger than 70 inches. It is going to compete against OLED TVs that are centered on 55-inch and 65-inch TVs by having 70 to 80-inch QLED TVs as its premium products. It is heard that Samsung Electronics is planning to maximize strengths of super-large TVs by adding 8K resolution on top of super-large size.
Samsung Electronics’ VD Business Department has been contemplating about ways to stabilize supply and demand of super-large panels. After Sharp abruptly notified stoppage of supply of its panels at the end of last year, it had gone through lack of supplies for couple months until this phenomenon started to ease up.
Samsung Electronics’ VD Business Department could not prepare clear solutions as Samsung Display converted L7-1 line, which is a 7th generation LCD line in Tangjung, to a production line for small and medium OLED panels. While it discussed with many panel manufacturers in order to establish stable supply network, it also had discussions with LG Display.
Samsung Electronics’ VD Business Department had been receiving about 1.2 million panels every month from Samsung Display, and this amount increased to about 1.4 million starting from the second half of this year. Most of 75-inch panels and panels that are bigger than 80 inches that are used for premium products are produced from Samsung Display’s L7-2 (7th generation) line. Most of Chinese panel manufacturers are still struggling to produce 50-inch panels.
L8-1 and L8-2 lines in Tangjung that are based on 8th generation and production lines in Suzhou are centered on 48-inch, 49-inch, and 55-inch panels. However these lines recently started to mass-produce 65-inch and 32-inch panels at the same time through MMG (Multi Model Glass). Samsung Display is also discussing about a way to produce 75-inch and 49-inch panels at the same time as well through MMG in order to respond to increased supplies of 75-inch panels.
In order to stabilize supply and demand of panels even more, it is heard that Samsung Electronics requested 65-inch and 75-inch panels from LG Display. LG Display is seen as a panel manufacturer in the world that has the most stabilized MMG structure. It already started mass-producing 65-inch and 32-inch panels through MMG and it also started producing 75-inch and 49-inch panels through MMG in this year.
Considering the fact that LG Display is a manufacturer that is also recognized of quality of its LCD TV panels, there is a good chance that Samsung Electronics’ 2018 premium QLED TV models will have LG Display’s panels.
“We decided to supply 65-inch and 75-inch panels starting from end of this month and we are discussing about amount of supplies of these panels.” said a representative for LG Display. “We are discussing ways to stabilize supply of products from a medium and long-term partnership rather than just treating this cross purchase as a temporary purchase.”
“Partners also have to side on one side as they strongly oppose trades between two businesses.” said a representative for an industry. “We hope that this will be opportunity to expand business opportunities between subsidiaries and partners from a perspective of rationalization.”
Staff Reporter Bae, Okjin | withok@etnews.com

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