Fear of China's OLED gains sparked Samsung and LG's budding romance

Samsung Display and LG Display are the leading South Korean display makers. As you'd expect, they're tough competitors, but there's recently been an improvement in their relationship. This has likely come from a realization that China's relentless pursuit of OLED dominance is a threat to the Korean OLED industry.

China's OLED onslaught is concerning for the Koreans

Samsung recently confirmed that it would source OLED panels from LG Display. As many as 5 million panels may be sourced in the coming years, with the number expected to grow if there's consistent demand.

Since Samsung has also shut down its last LCD panel production facility in China, it's also sourcing LCD panels from LG. Reports suggest that LG is also looking to shut down its remaining LCD factory in China. It's no secret that Chinese display manufacturers have flooded the market with cheaper LCD panels and now have their sights firmly on the last bastion of Korean display technology superiority: OLED.

BOE, China's state-owned display manufacturer, is building a $9 billion OLED manufacturing plant that will produce OLED substrates on the latest 8.6-generation technology, putting it squarely against Samsung Display in the race to supply panels for Apple's upcoming OLED MacBooks and iPads.

Even though the quality of Korean OLED panels may be better, China's will be much cheaper, and it will aggressively price them to gain market share, even if it loses money in the process. It will effectively force competitors to exit the market due to loss pressures, like it has already done in the LCD segment. China is poised to overtake Korea in the OLED market if the likes of Samsung and LG Display don't take steps to hold on to their dominance.

Industry watchers feel that both Samsung and LG need each other to counter the onslaught from China's in the lucrative OLED business. The Chinese manufacturers will not stop until they achieve their goal, so it's up to these Korean conglomerates to compete more effectively and retain their leading position.