April 26, 2024

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[THE INVESTOR] Prices of liquid-crystal display panels are expected to soar next year as Sharp has reportedly decided to stop supplying them to Samsung Electronics, the world’s largest TV maker, industry watchers said on Dec. 15.

Even though the two firms have not yet confirmed the decision, sources said Samsung has already sought LG Display's help after it was informed about the supply halt in a short notice last week.

“Sharp is the sole supplier of 60-inch panels to Samsung. It along with other TV makers will make all-out efforts to secure large-size panels, driving up their prices overall in the first half of next year,” said Soh Hyun-cheol, an analyst at Shinhan Investment and Securities. 

The Japan-based Sharp, now owned by Taiwan’s Hon Hai Group, more widely known as Foxconn, has shipped 8.27 million LCD TV panels this year, with 47 percent of them, or 3.9 million units, going to Samsung.

Shipments from Sharp may make up a modest 7.3 percent of Samsung’s total LCD TV panels secured at about 53.6 million units. Soh predicted that price hikes seem unavoidable considering Samsung’s strategic decision has affected panel prices directly.

Following Samsung Display’s decision to replace its existing LCD production line with that for organic light-emitting diode panels, the 40-inch panel prices soared 57.3 percent between March and November.

“Samsung is likely to reduce 60-inch TV production while beefing up production of 55-inch and 65-inch TVs,” the analyst said, predicting the demand for 55-inch and 65-inch panels could surge next year.

Sources say Sharp’s decision to break ties with its largest client is aimed at paving the way for its parent company Hon Hai, the largest iPhone manufacturer, to expand its presence in the appliance market.

Its Chairman Terry Gou has also never hidden his ambition to take on Samsung. Foxconn and Samsung competed to acquire Sharp, but the Korean tech giant wanted to purchase the LCD business unit only and failed to win the bid.

Samsung invested 10.4 billion yen (US$90 million) in Sharp in March 2013, becoming the company’s fifth-largest shareholder. After Hon Hai announced its intention to acquire Sharp for 388.8 billion yen in August this year, Samsung sold its entire stake in September.

“Industry watchers expressed concerns about Sharp’s possible LCD supply halt since early this year when the acquisition talks started. But Samsung seems to have not taken the concerns seriously,” said an industry source on condition of anonymity.

Samsung is adjusting its sales target next year and is expected to secure panels from LG Display, its crosstown rival. It is rare for the two Korean tech giants to team up as they compete in almost every sector such as electronics and displays.

Another source predicted LG Display will become one of the key beneficiaries from the Samsung-Sharp break-up, saying: “The company will see an earnings surprise next year due to soaring panel prices.”

Currently, LG Display and Samsung Display own 19.6 percent and 18.6 percent shares in the global LCD market, respectively, while Sharp and Innolux -- both owned by Foxconn -- hold a combined 18.6 percent.

By Lee Ji-yoon (jylee@heraldcorp.com)