SEOUL, Sept. 18 (Reuters/EP) -
Chinese flat panel manufacturers, which were previously underestimated as second-class players in the global LCD market, are getting envious looks from big names like LG Display and Samsung.
While Korean giants were busy developing the next generation of organic light-emitting diode (OLED) TVs, little-known Chinese companies have begun selling a type of display that is sharper than the standard LCD and cheaper than OLED.
Until last year, the UHD market was almost non-existent, with only 33,000 devices sold compared to 200 billion units in the LCD TV market. Since then, orders have grown as much as 20 times, thanks to China, according to data from research firm IHS.
Chinese consumers who want brighter, sharper images but can't afford displays made by LG and Samsung Display, a unit of Samsung Electronics, are turning to UHD.
The risk for OLED is that UHD could become the predominant product and that the long-awaited cheaper OLED displays arrive too late to displace them, analysts say.
The long-term potential of OLED is huge: ultra-high resolution, screens so thin that they could possibly be curved and even rolled up.
But its slow market introduction and austere prices have opened a window of opportunity for UHD manufacturers, in this case Chinese companies such as BOE Technology Group and CSOT, TCL's LCD unit.
In China, 55-inch UHD models sell for about $1,800. In contrast, a similarly sized OLED TV from Samsung Electronics costs about $10,000.
"I have to admit that we haven't fully appreciated the potential of the UHD market," LG Display CEO Han Sang-beom said recently.
"We assume it will be too early for this type of display to take off, and so we don't think much about having diverse UHD product lines, especially low-end. But I think for now we're not late and we're working hard to lead the market here."
While Korean manufacturers work on their response to this growing threat, Chinese UHD manufacturers are enjoying the fastest benefits in the industry.
Even rivals like Innolux and AU Optronics have joined in the fray, drawn to promises of big profits.
In the second quarter ended june, BOE Technology reported an operating profit margin of 8.9 percent, while China Star Optoelectronics Technology (CSOT) posted a profit of 9.6 percent.
By comparison, Japanese flat panel pioneer Sharp reported a margin of 0.5 percent. LG Display, the world's leading LCD maker, posted a profit of 5.6 percent.
Samsung Display, a unit of Samsung Electronics, made a profit of 13 percent, the largest in the industry. But excluding its fledgling OLED business, its LCD margin was between 3 and 7 percent, Bernstein forecasts.
Just as Korea snatched the flat panel business from Japan in the early 2000s, the surprise offensive by Chinese flat panel manufacturers could be a preview of what's going to happen, analysts say.
