Although South Korea is leading global OLED market while maintaining as the top country within display market, it is still highly dependent on foreign materials for important materials of LCD and OLED. Although South Korea quickly beat out Japan, which had led LCD market, and has become the top country by quickly and aggressively increasing outputs, it was never able to secure fundamental technologies for LCD and OLED. Although South Korea is the first to commercialize OLED unlike LCD, major fundamental technologies are actually developed by Japanese and American businesses. There is almost zero South Korean business that is distinguishing itself within R&D field for the next-generation materials. Because South Korean businesses have yet to take the upper hand in technologies while level of difficulty of technologies for implementing the next-generation products is getting higher, there are many potential risks hiding underneath South Korea’s material industry.
◊South Korean display manufacturers highly dependent on foreign materials for their products
After South Korea produced its first LCD in 1995, it became the top country within display market in 2006 based on market share (35%). Amount of annual exportation of displays surpassed $10 billion for the first time in October of 2006.
Although its display ecosystem has grown by beating out Japan and localizing relevant parts, it was not able to localize important materials. Market for liquid crystal, which is the main component of LCD, is monopolized by Merck from Germany and it has Chisso from Japan as a minor participant. Merck is attempting to expand its liquid crystal business from display to other areas such as telecommunication, lighting, and smart window.
South Korean display industry is entirely dependent on foreign businesses for glass substrate and cover window. Although LG Chem successfully invested into glass panel for display based on production knowhow from Schott of Germany and commercialized it, its impact on relevant markets is insignificant considering amount of its supplies and its technical skills. Corning, NEG (Nippon Electric Glass), and Schott are major suppliers.
Although South Korea was the first to commercialize OLED unlike LCD and has more than 90% of shares of small, medium, and large OLED markets, it is also dependent on foreign businesses for major materials and major equipment and parts that require high degree of technologies and are part of important processes.
According to The Korean Information Display Society’s report on ‘Roadmap for Technologies of Future Display Materials’, South Korea was highly dependent on foreign materials for major OLED materials in 2017.
South Korean display industry is 100% dependent on Japan for polyimide panel for flexible OLED. Samsung Display manufactures panels by receiving polyimide varnish from SU Materials, which is a joint corporate established by Ube Industrial and Samsung Display. LG Display receives polyimide panel from Kaneka.
Transparent polyimide panel is needed to implement transparent OLED, which is seen as the next-generation display, and it is also heavily influenced by Japan because there is a chance that polyimide fluoride, which is one of materials that is now regulated by Japanese Government, will be used. Actual impact from Japanese Government’s regulation needs to be monitored little bit more as amount of hydrogen fluoride content and amount of content and types of other materials are different for each business.
Duksan Neolux and LG Chem from South Korea and Idemitsu Kosan from Japan currently hold 45% and 27% of the shares respectively of OLED EML (Emitting Layer) market. Blue EML, which requires the most advanced technology, is monopolized by Idemitsu Kosan. Majority within the industry believes that it is quite difficult to develop competitive blue EML while avoiding tight patents.
UDC from the U.S., which has fundamental technologies in red and green phosphorescent dopant, is also recognized for its distinguished competitiveness.
“Although we had tried from many angles to replace materials from UDC, it was even difficult to analyze its patents and to avoid them.” said a representative for a South Korean material manufacturer. “It is not easy for us to develop our own products considering the fact that this industry lacks competitiveness and that there are many small businesses in this industry.
While South Korea owns 80% of the shares of color-filter market compared to 20% of the shares owned by Japan, it completely depends on foreign businesses for raw materials. It imports entire RGB (Red, Green, Blue) pigments, which are used for color-filters, from Japan and Europe.
“Although South Korean businesses have high market shares in some areas, most of them depend on foreign businesses for raw materials that make up their products.” said The Korean Information Display Society through its report. “Although important organic matters such as HIL (Hole Injection Layer), HTL (Hole Transporting Layer), and ETL (Electronic Transporting Layer) that determine efficiency and lifespan of an OLED, most of fundamental technologies and patents are owned by Japanese and American businesses.”
Although South Korea has the latest inkjet printing technology, which is considered as the next-generation processing technology, R&D on relevant materials is led by foreign businesses. Japanese businesses have fundamental technologies while Merck, 3M, and DuPont are currently developing relevant materials.
Foreign businesses are also recognized for their inkjet printing instruments. Tokyo Electron and Kateeva are seen as the ones with most competitive edge in this field. Although SEMES and LG PRI are developing inkjet printing instruments, majority within the industry believes that a possibility of their instruments being used before foreign instruments is relatively low.
South Korean businesses’ performance in markets for other next-generation display materials is also rare. Although there have been consistent efforts to develop materials such as TADF (Thermally Activated Delayed Fluorescence) that will replace blue phosphorescent material, such efforts are mostly led by European and Japanese businesses.
“Except for few businesses, most of South Korean material manufacturers are small and lack competitive edge.” said a representative for a South Korean material manufacturer. “It is not easy for us to research into next-generation materials when there is not a capital or a business that will invest into us since the duration for R&D on these materials is very long.”
◊Strong will and perseverance and government support key to localizing important materials
Although Japanese Government designated fluorine polyimide as one of the items it would regulate, it is likely that this regulation will not have an immediate impact that will stop production of relevant products. However, each business needs to take different actions as some businesses will or will not be able to avoid the regulation depending on how materials are synthesized.
Fluorine polyimide is used as a material for a transparent polyimide that is a new cover window for a foldable display. KOLON Industries and SKC already developed related products and are continuing research to commercialize them.
South Korea succeeded in localizing transparent polyimide as part of South Korean Government’s ‘WPM (World Premier Materials) Program’ that started in 2010. South Korean businesses started initial development and they were able to commercialize transparent polyimide while receiving support from South Korean Government.
WPM Project is comprised of $847 million (1 trillion KRW) from government fund and another $847 million from private fund. While previous government projects on R&D had lasted between three to five years, WPM Project had been a long-term project that had lasted for about eight years and it had drawn expectations as an opportunity to increase competitive edge of South Korea’s weak material industry.
South Korea’s transparent polyimide is seen as a poorer product compared to Japanese transparent polyimide when it comes to quality. This is the reason why Samsung Display decided to use Sumitomo Chemical’s transparent polyimide when it developed foldable display.
“It is extremely to difficult to see investments made into R&D on materials as South Korean material manufacturers have yet to make profits for more than ten years.” said a representative for the industry. “Strong perseverance by an executive who is intent on commercializing important materials and strong will by advanced businesses, and South Korean Government’s support that utilizes failure as foundation for new R&D are all needed.”
Staff Reporter Bae, Okjin | withok@etnews.com