Chinese display corporation BOE is diversifying the supply chain of the display driver integrated circuits (DDI) used in Apple iPhones, causing projections that LX Semicon, which has effectively monopolized this supply until now, will take a hit. Starting this year, LX Semicon's competitor, Taiwan's Novatech, will supply DDIs to BOE for iPhones. LX Semicon is likely to see a decline in profitability as its largest customer, LG Display, pursues dual sourcing for DDIs due to cost reduction reasons and now cedes its BOE orders to Novatech.
According to industry sources on the 8th, Novatech has entered the supply chain of DDIs delivered by BOE to Apple iPhones starting this year. BOE is the main customer for LX Semicon after LG Display. In the first half of this year, LX Semicon's revenue generated from BOE is estimated at 253.5 billion won, accounting for about 30% of its total revenue.
DDI is a semiconductor that helps control each pixel on displays mounted on smartphones, TVs, and tablets to produce clear and vivid images. Samsung Electronics is the market leader in the DDI segment, holding about 30% of the global market share, followed by Novatech and LX Semicon. In this context, Novatech has initiated strategies such as lowering component prices to capture market share from LX Semicon and has begun supplying to LG Display and BOE.
LX Semicon has reportedly ceded more than half of the DDI orders for the Apple iPhone series in its supply chain for LG Display to Novatech. LX Semicon had previously compensated for this by increasing its supply to BOE last year, but it is analyzed that this will be difficult starting this year due to the diversification of BOE's supply chain.
An industry source noted, "The expected increase in shipments of organic light-emitting diode (OLED) panels for Apple's main customer, LG Display, compared to the previous year is positive. However, the decline in market share within customers such as LG Display and BOE could lead to a decrease in LX Semicon's DDI sales for mobile applications."
LX Semicon's expectations for annual operating profit this year are also not high. According to financial data firm FnGuide, the projected annual operating profit this year is 124.3 billion won, a decrease of about 25% compared to last year's 167.1 billion won. Jeong Won-seok, an analyst at iM Securities, explained, "LX Semicon is expected to face competition for market share among customers this year, and combined with uncertainties arising from the United States' reciprocal tariff policy, it will be difficult to anticipate an improvement in demand from the upstream industry."
To reduce its high dependency on DDIs, LX Semicon is actively pursuing diversification of its business portfolio by advancing into new sectors such as automotive microcontroller units (MCUs) and heat dissipation substrates. However, the revenue contribution from these new businesses is currently low. An industry source stated, "LX Semicon has made investments in research and development (R&D) to address the long-standing high dependency on its DDI business, but so far, there has not been significant sales generated, making it difficult to achieve performance improvement in the short term."