The extra funding was announced by LG in its second-quarter earnings call today. The company will use the money to produce large-screen OLED displays for smartphones and other products. It will also cover the development and production of flexible OLED panels, a technology which is being widely anticipated for wearable tech and next-generation mobile devices.
The investment takes LG Display’s total funding allocation for OLED panels to 15 trillion won, or around $13.5 billion. The company is aiming to secure its position in the rapidly growing OLED display market. Although LG leads in the production of TV-sized OLED panels, it is significantly trailing market leader Samsung in overall production.
Samsung’s share of OLED sales is believed to be around 90 percent. Samsung and LG have long battled each other in the display market. The contest over OLED dominance seems to be tilting firmly in Samsung’s favour though, a fact which is concerning analysts and smartphone brands.
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Earlier this month, rumours began to circulate that Apple is quietly directing funds to LG to help it develop OLED products. Yesterday, reports emerged that Apple itself has bought OLED manufacturing equipment. It’s thought it plans to use the technology to help companies including LG Display improve their products.
One analyst told Reuters that today’s investment announcement won’t be enough for LG to start large-scale OLED production. Speculating that Apple’s involvement could well be genuine, Heungkuk Securities analyst Lee Min-hee said LG “doesn’t have the firepower” to set up all the production lines it needs.
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LG’s backing from Apple is a clear signal from the California-based company that it’s uncomfortable with its reliance on rival Samsung. Samsung’s position as the undisputed market leader is also worrying other brands who are concerned about its long-term implications.
Unless firms like LG start to produce large volumes of panels soon, competition in the OLED market could be virtually eliminated. Samsung would then be able to start driving up prices, forcing the cost of third-party mobile devices up while keeping its own Galaxy handsets at the current level.
LG hasn’t commented on the situation. However, it predicted in its earnings call that smartphone OLED shipments will increase from 120 million units this year to 370 million by 2020. It’s clear LG won’t be wanting Samsung to claim 90 percent of those sales, making the expansion of its own production facilities a pressing concern over the next year.
