Samsung Display Co., South Korea’s leading OLED maker, has decided to convert its liquid crystal display (LCD) TV panel production lines to organic light-emitting diode (OLED) smartphone panel fabs to be equipped by next year with an annual capacity of 200 million units to meet growing demand for OLED panels from Chinese smartphone makers.

Samsung Display will dismantle LCD TV panel lines at its Tangjeong L7-1 fab and renovate the space to churn out 20 million OLED panels for smartphones a month, according to industry sources Wednesday.

Set makers of the world’s largest smartphone market have been rushing to opt for OLED for their phone screens following the suit of the industry leader Apple Inc. that will be releasing iPhones in OLED display from next year. Samsung Display supplies most of OLED panels produced at the facility to its largest customer Samsung Electronics Co. and Chinese smartphone makers.

The display maker is going to tear apart equipment in the lines rather than selling them to accelerate ramp-up in OLED capacity. Previously, Samsung Display sold its old LCD panel lines to foreign panel manufacturers - L5 line to China-based LCD module maker Truly early this year.

Samsung Display expects that it would gain higher profits from switching over to OLED from 40-inch LCD TV panels whose demand is already saturated. Its pullout and reduced capacity could help strengthen prices in LCD TV panels.

Samsung Display has made 5.83 trillion won ($4.93 billion) of investment in the existing TV and small- and mid- sized OLED panel-making facility over the first nine months of this year, and would spend another 5 trillion won or more to ramp up capacity in OLED display lines in the fourth quarter. The company also plans to expand its investment in high-value added products including the dual-edge display used for Samsung’s Galaxy S7 series to bolster its profitability.

Samsung Display commands over 95 percent of the global market for small and medium OLED panels as Samsung Electronics has long been installing OLED screens on its bestselling phones.

According to global market research company IHS Markit, the share of OLED panels in the market for 9-inch or smaller displays grew from less than 20 percent in terms of sales last year to 35.1 percent at the end of June this year. It projects OLED will make up 52 percent of the market in 2020.

By Lee Dong-in

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