* Chinese LCD makers shipping out more UHD displays
* UHD displays supported by growing Chinese market
* Chinese enjoy fattest profit margin in LCD sector
By Miyoung Kim
SEOUL, Sept 17 Chinese flat screen makers, once
dismissed as second-class players in the global LCD market, are
drawing envious looks from big names such as LG Display Co Ltd
While the Korean giants were busy developing next-generation
organic light emitting diode (OLED) TVs, little-known Chinese
companies have started selling a type of display that are
sharper than the standard LCD and cheaper than OLED.
Say hello to ultra high-definition (UHD) displays.
Until last year, the UHD market had been almost
non-existent, with just 33,000 sets sold in the 200 million-unit
LCD TV market. Since then, shipments have soared around 20-fold,
thanks to China, data from research firm IHS shows.
Chinese consumers who want brighter and sharper images but
can't afford OLED screens made by LG and Samsung Display, a unit
of Samsung Electronics Co Ltd, are turning to UHD.
The risk for OLED is that UHD may become mainstream and the
long-awaited cheaper OLEDs arrive too late to displace it,
OLED's long-term potential is huge: ultra-high resolution,
screens thin enough that they could conceivably be curved or
even rolled up, and so on.
But its slow introduction into the market and austere prices
have thrown open a window of opportunity for UHD makers, in this
case Chinese companies like BOE Technology Group Co Ltd
and TCL Corp's LCD unit CSOT.
In China, 55-inch UHD models sell for around $1,800. By
contrast, an OLED TV of similar dimensions sold by Samsung
Electronics costs around $10,000.
"(I) have to admit that we hadn't fully appreciated the
potential of the UHD market," LG Display's Chief Executive Han
Sang-beom said recently.
"We assumed it'll be too early for this type of display to
take off, and thus didn't think much of having diverse UHD
product line-ups, especially in the low end. But I think we are
not late just yet and we are working hard to lead the market
As Korean display makers work on their response to this
growing menace, Chinese UHD makers are enjoying the fattest
margins in the industry.
Even cross-strait rivals Innolux Corp and AU
Optronics Corp have joined in the fray, drawn by
promises of big profits.
In the second quarter ended June, Shenzhen-listed BOE
Technology reported an 8.9 percent operating profit margin,
while China Star Optoelectronics Technology (CSOT), a unit of
China's biggest TV maker TCL Corp, posted a 9.6 percent margin.
By comparison, Japanese flat-screen pioneer Sharp Corp
reported a razor-thin 0.5 percent margin. LG Display,
the world's No.1 LCD maker, posted a 5.6 percent margin.
Samsung Display, a unit of Samsung Electronics, had a margin
of 13 percent, the biggest in the industry. But excluding its
fledging OLED business, its LCD margin is between 3 and 7
percent, according to a Bernstein forecast.
Just as Korea overtook flat-screen pioneer Japan in the
early 2000s, the surprise offensive by Chinese flat screen
makers may be a taste of what's to come, analysts say.
Chinese UHD producers have steadily expanded their capacity.
In terms of cost and technological know-how, UHD presents lower
barriers to entry compared to OLED.
"The Chinese have done very well so far this year and their
momentum is likely to continue at least for another year or so,
as they have spotted the potential of this niche market well
ahead of bigger rivals," said Nam Dae-jong, an analyst at Hana
Daetoo Investment & Securities.
"They've got also strong captive customers - Chinese TV
manufacturers and a booming China market. It will take quite a
while for Samsung and LG, which made a strategic mistake by
ignoring the potential of UHD, to overtake them," Nam said.
Jolted by the reality of a growing UHD market, Samsung
Electronics unveiled a 110-inch UHD TV in January.
Interestingly, the UHD displays were not made by Samsung
Display, but were produced by Taiwan's AU Optronics.
"Even with some expansion of the Chinese panel suppliers we
do expect Samsung and LG Display to stay dominant and continue
production in LCD," said Sweta Dash, director at IHS.
While Samsung and LG Display are investing billions of
dollars in OLED this year, the two giants are also broadening
their product lineups to include more popular 50 to 60-inch UHD
BOE Technology is now planning to raise 46 billion yuan
($7.5 billion) in the biggest Chinese equity offering this year,
to build panel production lines and increase its stake in its
LCD venture BOE Display Technology.
($1 = 1093.8000 Korean won)
(Additional reporting by Harro Ten Walde in BERLIN; Editing by