Samsung is set to be a major force in the CE market by owning the technology incorporated into its own products.
When Samsung SDI was trying to develop full-colour passive matrix organic light emitting diode (PM OLED) technology in 2000, Pioneer, the market leader at the time, compared the South Korean company’s efforts to “climbing Mount Fuji on your hands”.
But Samsung SDI surprised its Japanese rival two years later by becoming the first global manufacturer to successfully mass produce panels using the next generation display technology. According to the FT Newspaper since then, it has become the global market leader for PM OLEDs with a 28.4 per cent share, ahead of RiTdisplay of Taiwan with 20.5 per cent and Pioneer with 13.7 per cent. OLEDs are considered superior to thin film transistor liquid crystal technology because, unlike LCDs, the panels are self-luminant and require no external light source. The absence of key components required for LCDs – a back-light unit and a colour filter – makes OLED panels much thinner and lighter and more suitable for compact mobile devices.
OLEDs also have wider viewing angles, faster response times, greater temperature ranges and brighter pictures, increasing their appeal for outdoor display applications such as mobile video phones. Samsung SDI is now taking the technology even further by attempting to become the first company to mass produce more advanced AM (active matrix) OLED panels. The company plans to invest Won466.5bn ($480m) this year, about half of its total capital expenditure, in AM OLED facilities and aims to start massproduction next year.
“We are focusing all our R&D capabilities into this area because it is our future growth business,” says Yoo Eui-jin, vice-president of Samsung SDI. “A display revolution is needed to transfer more data faster in the changing telecoms environment. AM OLEDs are the best display devices to meet such demands.”
Samsung SDI plans to produce 20m AM OLED panels next year and increase output to 50m panels in 2008 to capture the high-end mobile phone market.
PM OLED panels are already widely used in sub-screens of mobile phones but Samsung SDI is betting on the growth potential of AM OLEDs, which have a higher resolution, consume less power and are easier to expand into large-size screens.
Display Search, a market researcher, has forecast that the global OLED market will grow from $450m last year to $4.5bn in 2008, as applications expand to other mobile devices such as personal multimedia players, MP3 players, digital still cameras and digital video camcorders.
But some display makers believe that OLED applications will eventually expand to large-size screens such as notebook computer panels and televisions.
Korea Electronics Technology Institute, a state-run research centre, has predicted that OLED TVs will be produced in two years, creating a separate $3bn market, and will be used in notebook and desktop computers in 2010, creating a $6bn market.
Competition is likely to intensify to take advantage of these opportunities, with Japanese electronics groups the main threat to Samsung. Sony is speeding up the development of its AM OLED business. Sanyo launched a digital camera with a 2.2 inch AM OLED screen at the Consumer Electronics Show in Las Vegas in January. Other display makers such as LG Philips LCD, the joint venture between LG Electronics and Philips, and AU Optronics of Taiwan, are also investing in AM OLED production.
Samsung Electronics, an affiliate of Samsung SDI, has already developed a 40-inch AM OLED TV. Samsung SDI says it will take at least three years to produce large-size OLED TV panels but once that occurs, it will become an increasingly important part of its business.
“We will target the premium segment of large-size products, rather than competing in the same segment with other display technologies,” says Mr Yoo.
But some analysts question the suitability of OLEDs for large-size screens, citing high production costs and a relatively brief operational span. “OLEDs still have a long way to go to be applied in large-size panels. It will take a decade for them to replace LCDs [in this segment],” says James Kim at Lehman Brothers.
The question is how fast OLED producers can bring down production costs to mass produce large-size screens. Display makers believe OLEDs will eventually overtake LCDs once the technology matures.
“No one expected LCD TVs would appear because of the high cost at the initial development stage. OLEDs will take a similar development trajectory to LCDs,” says Jae Lee, an analyst at Daiwa Securities.