April 24, 2024

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[THE INVESTOR] LG Electronics said on Jan. 26 it has no plans to claim compensation from Sharp despite the Japanese display maker’s decision to suddenly halt its supplies of liquid-crystal display panels.

“Due to insignificant supply volume, the two firms have decided to seek a peaceful agreement,” an LG spokesperson told The Investor. He declined to reveal the exact number of panels being supplied.

The comments come after its crosstown rival Samsung Electronics filed a US$492 million arbitration suit against Sharp and other two Japanese suppliers on Dec. 22 for halting their LCD supplies to the world’s largest TV maker at a short notice.

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In the suit, filed with the International Court of Arbitration of the International Chamber of Commerce, Samsung demanded the firms continue panel supplies or pay damages.

Following the move, speculation was growing that other TV makers such as LG and China’s Hisense -- who have also been notified of the supply halt from Sharp -- are likely to seek compensation.

Sharp supplied an annual 5 million panels, almost 10 percent of Samsung’s total LCD TV production that stands at about 50 million units. For this year, sources said Samsung had increased orders from Sharp to some 6 million units as it was reducing its own LCD production to focus more on organic light-emitting diode panels for mobile devices.

LG produces almost 30 million LCD TVs annually, securing much of the panels from its sister firm LG Display.

Sharp’s supply halt to top TV makers is causing ripple effects in the global display market that is dominated by Korean, Chinese and Japanese companies.

For the time being, Samsung plans to raise orders from its display-making unit Samsung Display and is also in talks with LG Display, Taiwan’s AUO and China’s BOE. Japan’s Sony, which uses Samsung panels, is also asking help from LG Display and other Chinese display makers to fill up the loss.

“Uncertainties are growing surrounding TV panel prices recently,” an LG Electronics executive said in a conference call on Jan. 25. “Coupled with the Sharp-Samsung breakup, the situation is expected to continue in the first half of this year.”

Sharp, now owned by Taiwan’s Hon Hai Group, more widely known as Foxconn, has not yet made any official comment on its recent decision.

Industry watchers say the company could have reduced supplies to rivals to nurture its own TV and interactive-display business amid a global shortage of larger LCD panels.

Currently, LG Display and Samsung Display own 19.6 percent and 18.6 percent share 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)