From Competition to Cooperation: LG and Samsung
May 14th, 2007By Jin Kim, Director of TFT LCD Market Research
LG and Samsung, the two leading South Korean conglomerates and flat panel display (FPD) archrivals, announced a strategic alliance to increase competitiveness against Japanese and Taiwanese rivals. On May 14, South Korea’s Ministry of Commerce, Industry and Energy announced that the country’s four major display makers—Samsung Electronics (SSE), Samsung SDI, LG.Philips LCD (LPL) and LG Electronics (LGE)—established the Korea Display Industry Association (KDIA). KDIA will be headed by Sang-wan Lee, chief of the LCD business division of SSE, with the purpose of joint research and development (R&D) on core display technologies. Those technologies will be selected in August through consultations with the government.
Instead of competition that may lead to the demise of the others, members have agreed to sharing patents acquired through government-supported R&D activities. SSE and LGE also agreed purchase TV panels from each other if necessary from 2H’07, thus breaking a long-held practice of not purchasing each other’s panels. Young-ju Kim, the Minister of Commerce, Industry and Energy, applauded the strategic alliance and stated the importance of leadership of large enterprises for a successful alliance.
Establishing KDIA might backfire if Taiwan or Japan decides to establish a similar association. South Korea has just two conglomerates that have a major presence in the display industry. Taiwan has smaller suppliers but many more of them, and Japan has three major PDP suppliers.
According to DisplaySearch’s Quarterly Large-Area TFT LCD Shipment and Forecast Report, Samsung and LPL are expected to capture 23.2% and 20.5% market share, respectively, for large-area LCD areal shipments in Q2’07. Taiwan’s top two suppliers, AU Optronics (AUO) and Chi Mei Optoelectronics (CMO) are expected to capture 19.4% and 11.6%, respectively. Clearly, Samsung and LPL have a lead over the top two Taiwanese suppliers. However, the difference in share for Korean and Taiwanese suppliers as a whole is much smaller. Korea is forecast to have a 46.1% share of large-area areal shipments in Q1’07, and Taiwan’s forecast is only slightly lower at 43.5%.
In terms of plasma display panels (PDPs), Korea leads with 54.1% share of capacity followed by Japan with 44.4% in Q4’06. LGE and SDI are the top South Korean suppliers. LGE captured 21.5% of PDP shipments in Q4’06, and Samsung had 20.8%, according to DisplaySearch’s Quarterly PDP Module and TV Shipment and Forecast Report. But the largest PDP supplier is Japan-based Matsushita, with 40.1% of PDP shipments in Q4’06, and two other major PDP suppliers are also in Japan: Pioneer and Fujitsu-Hitachi Plasma.
It will be interesting to see how other regions respond, especially Taiwan with LCD suppliers and Japan with PDP suppliers.
3 Responses to “From Competition to Cooperation: LG and Samsung”
By Paul Gray on May 15, 2007 | Reply
It will be interesting if there is a legal challenge somewhere as two suppliers with a combined share of over 40% of the market apparently colluding could be judged a cartel…
By Taylor Wu on May 16, 2007 | Reply
This might not be a good news to Chinese TV makers… and the Taiwan LCD Panel Makers…