Samsung and LG are two of South Korea's top companies. These diversified conglomerates compete in a variety of industries at home and overseas. In some areas, Samsung is in the clear lead, leaving LG so far behind that it's no longer in the rear view mirror.
However, certain circumstances appear to have brought the two companies together. Rather unsurprisingly, there's a Chinese element behind it. That's why it's now expected that a long-awaited partnership between Samsung and LG may be announced as early as this week.
Samsung LG deal will be worth a few billion dollars
Samsung might be the world's top supplier of mobile OLED panels but LG Display dominates the large OLED panel segment. Samsung's dislike for OLED TVs is well known so the company didn't bother manufacturing OLED panels for TVs.
It perfected its own QLED panel technology for high-end TVs while using LCD panels for the more affordable second-tier TVs. This strategy has worked well for Samsung over the years since there was enough of a price difference between LCD and OLED panels. Then came the Chinese. They improved the quality and yields of their LCD panels and made their products competitive.
The price for LCD panels has risen as demand increases to the point that the gap between LCD and OLED panel prices has drastically reduced. So Samsung can now switch to OLED, which provides benefits over LCD, without taking a big hit on its margins.
The only problem is that Samsung doesn't make large OLEDs. So it has to walk across town to LG Display. The company already supplies OLED panels to major TV manufacturers like LG Electronics, Sony and Vizio. It has lowered defect rates, increased production yields and is even expanding capacity.
There have been a few reports over the past few months indicating that a historic partnership worth a few billion dollars between Samsung and LG Display is on the cards. Samsung will reportedly use LG's OLED panels in its second-tier TVs. It's flagship models will continue to use QLED. This will be enough to hold Samsung over until Samsung Display is able to sort out the yield constraints for its next-gen QD-OLED panels.
Korean media is now reporting that the head of Samsung Electronics' video display business division Han Jong-hee will confirm the partnership with LG Display as early as this week. Samsung is expected to sign a contract to source between 2 to 3 million OLED panels from LG Display per year until 2024.
