Samsung Display Co plans to spend 13.1 trillion won (US$11 billion) to develop and build next-generation displays, responding to a flood of supply and price pressure from fast-moving Chinese rivals.
In an announcement event attended by South Korean President Moon Jae-in and Samsung Electronics Co vice chairman Jay Y. Lee, the investment was presented as a move to reorganize the display industry while maintaining Samsung’s global lead and South Korea’s established dominance.
The government is to invest about 400 billion won into next-generation displays to propel that objective, Moon said.
The Samsung unit will build a quantum-dot display production line in Asan, according to a company statement, which is to begin operations in 2021, with an initial monthly capacity of 30,000 panels larger than 65 inches.
Production would then be scaled up, with a long-term development plan that stretches out to 2025.
The investment would help create 81,000 jobs, the company said.
Samsung Display and South Korean peer LG Display Co are grappling with a surge of competition from Chinese suppliers, such as BOE Technology Group Co (京東方科技), which in recent years have ramped up LCD capacity and are increasingly making inroads into next-generation screens.
To offset a decline in margins and loss of clients, Samsung Display is moving forward with development of quantum-dot displays.
Lee has pledged to invest for the long-term in the display business, which is one of the three main pillars — alongside memory chips and smartphones — in which the South Korean tech champion is world leader.
The company is making a huge bet on the market, as the business environment deteriorates and a trade spat between Seoul and Tokyo creates uncertainty around the supply of chemicals and components necessary to manufacture advanced displays.
Samsung Electronics this week reported a quarterly profit decline of more than 50 percent, though that was less of a fall than anticipated.
South Korea’s largest company is the world’s foremost producer of high-margin OLED screens, but hit a snag last year when orders from Apple Inc underwhelmed after the marquee iPhone XS fared worse than expected.
It remains to be seen how enticing the new iPhone 11 Pro models will be to consumers over the critical holiday shopping season, though analysts are growing optimistic on demand.
Away from displays, the unpredictability surrounding tensions between the US and China has led to a downturn in the chip industry at a time when smartphone demand tapers off and the pace of data center construction decelerates.
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