Samsung Electronics will purchase LCD panel from rival LG Group.The demand for LCD TV has expanded,Samsung's own production and existing procurement channels alone are difficult to cope with.By the end of the year, LG will supply about 70 million LCD panels required for the televisions. South Korea's two strong cooperation for the panel is the first time. The two companies are likely to expand the scope of cooperation, or will include the Japanese companies, including the world's motor companies have an impact on the strategy.
"More than 40 inches of panels will be available in the near future," said a people from LG's panel company LG monitors on July 20. Samsung has expressed its intention to further expand procurement, and LG plans to supply it. Samsung produced about 47.4 million flat-screen TVS in 2016. The market share has reached 28%, ranking first in the world and LG group in 2nd place. Samsung and LG, which are fiercely competitive around the world, have a strong sense of confrontation and almost never trade in mechanical and electrical operations.
The SDP, which operates the company, told samsung at the end of 2016 that it had stopped making deliveries. One analysis suggested that the company supplied samsung with panels for two million to three million televisions in 2016. In order to intensify its preparations for the end of the year, samsung has only relied on the expansion of its purchases from Chinese companies to meet all demand, so it has to contact with LG.
Jin dongyuan, an analyst at KB securities in South Korea, noted that "high performance products such as lithium ion batteries, samsung and LG are likely to expand the partnership". The move could have an impact on the global panel power map.
Samsung and LG see each other as competitors. In the wake of the financial crisis, the south Korean government has mediated discussions on co-operation, but the two sides have failed to agree. While the two companies are highly competitive, recent Chinese companies have begun to catch up, and the situation is undergoing subtle changes. The voice points out that co-operation may not be achieved if the two koreas still have the momentum to seize market share from Japan.
The organic EL panel, which has been slowly shifting to higher margins, has also become a backdrop for both sides. In samsung's display business, organic EL is about three times as profitable as the LCD panel. Samsung seems to think that it is best to focus on growth, while working with direct competitors in the LCD panel.