Samsung May Face LCD Shortage, After Deal With LG Stalls

September 5, 2017 - Written By Mark Real

Samsung may face a shortage of LCD panels for television sets soon, as the company has yet to sign a contract with LG Display. The deal was supposed to augment Samsung’s current supply of 40-inch and 60-inch LCD displays, after the Japanese manufacturer Sharp announced, that is ending its supply relationship with Samsung Electronics back in December 2016. In the previous year, Sharp delivered more than 4.5 million LCD panels to the South Korean tech giant, which is equivalent to 10 percent of its entire television business. While Samsung is already sourcing its some of its display requirements from the Taiwanese company Innolux, and Chinese manufacturer BOE, the TV maker is still looking for additional suppliers to provide the much-needed components. If the company fails to resolve this supply constraint soon, it could lead to lower production of television sets.

In an effort to prevent such problems, Samsung negotiated with LG Display for a possible deal on LCD panels, wherein the latter will supply at least 700,000 panels. The talks commenced last January, and a deal was supposedly sealed last July, but no contract has been signed by the two companies after 9 months of negotiations. Industry sources claim that there are two key reasons why negotiations came to a standstill. First is the inability of LG Display to adjust the production and supplies of its existing clients, especially in periods when the panel maker faces reduced supply of display components. In addition, LCD panels produced by LG fall short of Samsung’s standards for large displays, as the TV maker requires screens with UHD resolution. However, LG produces its large displays using the M+ Panel technology, which produces screens with resolutions lower than what Samsung requires.

If the deal pushes through, LG will manufacture the LCD panels at Paju, South Korea, which is where the company’s P7, P8, and P9 production lines are found. LG is also building additional production lines in order to boost both LCD and OLED fabrication, although it may take until 2019 before these facilities operate at full capacity. Even if the deal is signed within the next few weeks, first Samsung TVs with LG-made LCDs will likely appear next year, as it usually takes three to four months to manufacture, test, and then release such products.