Samsung Mulls Suspending South Korea LCD Plant Due to Oversupply
by Anton Shilov on August 16, 2019 10:30 AM EST
Samsung Display is considering to suspend one of its LCD panel production facilities in South Korea because of oversupply, the company said this week. There is no final decision yet, but falling profitability and lowering demand could trigger the company to halt manufacturing.
LCD panels for various applications including computer displays, televisions, smartphones, digital signage, and other are produced at dozens of factories in China, Japan, South Korea, and other countries creating oversupply and cut-throat competition. Given macroeconomic uncertainties, demand for numerous devices such as TVs is expected to be weak during the year-end shopping season, which puts further pressure on panel makers.
Samsung and other advanced makers have tried to differentiate their own LCD-based products by adding quantum-dot films and other improvements to displays or TVs (to their backlighting, to be more precise), which certainly helped to improve image quality produced by these devices and enabled the manufacturer to charge a premium. Meanwhile, it looks like there are simply way too many LCD panels made these days.
Being the world’s largest maker of LCDs, Samsung operates two giant LCD production facilities in South Korea, as well as one in China. The company naturally wants to keep the latter plant, but the fate of one of the sites in South Korea is something that remains to be seen.
The official statement by Samsung reads as follows:
“Samsung Display has been adjusting the production output and facility operation due to oversupply and worsening profitability, and we are still considering the suspension of the line, but nothing has been decided.”
Samsung’s rival LG Display has converted one of its LCD lines to an OLED plant. In fact, LGD has been focusing on production of OLEDs for quite some time and opened up new OLED sites both in China and in South Korea. Moreover, the company is also considering various scenarios for its remaining LCD facility in South Korea, according to a claim made by its CFO last month.
Related Reading:
- LG to Start Production of OLEDs in China Next Month, Set to Double OLED Output
- Supply of DRAM, NAND & Displays Could Be Disrupted by Japan & South Korea Dispute
- Samsung at CES 2019: 219-Inch and 75-Inch Micro LED Ultra-HD TVs Demonstrated
- Samsung Announces CRG9: A 49-Inch Curved 5K 120 Hz FreeSync 2 Monitor
Source: Reuters
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valinor89 - Friday, August 16, 2019 - link
What a world we live in where I can only be 85% sure that the comment from above is sarcastic or a joke after having read it twice.imaheadcase - Saturday, August 17, 2019 - link
If you know PeachNcream most stuff he even believes is also a joke here.PeachNCream - Saturday, August 17, 2019 - link
Just envision I've given you a participation ribbon and a cookie for showing up and you'll feel better about your life choices that I've made you question.rocky12345 - Friday, August 16, 2019 - link
About now. It has been a tactic a lot of companies have used in the past when prices start to get to low and they want to raise the profit margin up a bit is to cut the supply of a product just enough to make it so there is less of that product in the sales chain and demand stays the same but because there is not enough product to keep up with supply the prices also go up.Now I am not saying this is what Samsung is doing here but I thought I would throw my thoughts on this anyway.
In Canada almost every summer we see the big gas companies do things like shut down the gas refinery's for a set period of time saying it is for maintenance and the gas prices raise up because of this and they take for ever to go back down and they never go back down to where they were before. We see it in the memory industry as well where they cut production and the prices rise up because of it. Probably every industry does it to some extent but for most of those we do not even notice it much. I have no problem with companies wanting to make money but if they lie and say one thing and the reason behind it but what they are actually only doing is trying to change the market prices to make it so they can make even more profit I do not agree with that at all.
Come clean and just admit that you want to make more money and the current market prices are to low and getting very close to what it costs to make the product and they need to get the prices a bit higher to stay on the plus side of the profit margin I have no issues with that. I like to make money as well. No tin foil hat here just stating my opinion and again I am not saying this is what Samsung is doing here I actually like Samsung products since all of my TV's and mobile phones are made by Samsung and I like my Samsung products a lot.
edzieba - Friday, August 16, 2019 - link
Reducing output when there's oversupply is not price fixing, it's just normal business practice, and is announced in advance (e.g. this very article). The drawback is that if other manufacturers do not follow suit, then rather than selling fewer units at higher margins, you are merely selling fewer units.'Price fixing' is a very specific situation where multiple manufacturers collude to cut supply at the same time, and to control the resultant market share (e.g. to maintain a negotiated split) in order to artificially increase prices, both through undersupply and through artificial market segmentation and noncompetition (e.g. "you leave the TV market but get the whole phone market, and we'll pull out of the phone market and get your share of the TV market").
t.s - Saturday, August 17, 2019 - link
The things is, other manufacturers following suit (start with wink-wink or emails exchanges). And that, my friend, is price fixing.FunBunny2 - Saturday, August 17, 2019 - link
"Reducing output when there's oversupply is not price fixing"Well, according to Laffer supply creates its own demand, so vendors should just keep spitting out product and consumers will just take more. That's how he said it works. In such high-capital production like this, Samsung has to find the moolah to pay off the huge fixed cost of the plants. No ship panels, no get money. Regular economists, not just fools like Laffer, council marginal cost pricing in such situations; IOW, any money you get from selling your widgets that's more than the variable (close enough) cost of production defrays amortization of the plant and equipment. IOW, yet again, shutting the plant(s) may well put Samsung in a worse condition overall.
Beaver M. - Sunday, August 18, 2019 - link
After we saw the same shit on RAM and HDDs, its very healthy to be critical. You obviously arent.shabby - Friday, August 16, 2019 - link
I hope they made too many 80"+ panels too...zodiacfml - Friday, August 16, 2019 - link
Simple. Focus on higher end or larger displays to let other suppliers take the lower end of the market. It won't improve revenue but at least, won't kill a facility which could be useful in the future.