The premium TV display panel technologies of Korea and China are splitting into Korea's organic light-emitting diode (OLED) and China's RGB LED, setting the stage for a supremacy battle. RGB LED TVs are built on the existing liquid crystal display (LCD) TV structure that uses an LCD panel and red (R), green (G), and blue (B) color filters. They are "non-self-emissive" products that require an external light source, and their differentiator from existing mini LED-LCD TVs that apply white LED backlights is the use of RGB light-emitting diodes (LEDs) as the backlight unit (BLU).
Chinese corporations' RGB LED TVs, with picture quality exceeding expectations, are aiming to eat into OLED TVs' share of the premium TV market. In response, LG Display plans to maximize unit cost reductions by making TV OLED panel production as efficient as possible. However, as Chinese RGB LED panel technology is still in its early stage, it is estimated that panel costs are similar to or higher than OLED, leading to a dominant outlook that OLED's advantage in the premium TV market will continue for the next one to two years.
According to the industry on the 1st, the cost of OLED panels produced by LG Display (based on 65-inch TVs) is expected to soon fall below $500 (about 700,000 won). Back in 2020, the 65-inch OLED panel cost was close to $1,000 (about 1.4 million won). Since then, LG Display has steadily improved productivity and yield, targeting below $500 this year after reaching around $600 last year.
Over the past two to three years, LG Display has pursued line expansions and yield stabilization to fully shift its revenue structure to OLED. This effort, which began paying off last year, achieved a 30% cost reduction from the previous year and is continuing this year. Next year, the company aims for additional production cost cuts through a design innovation that changes the display driver IC (DDI) structure.
Since the start of this year, Chinese TV makers such as TCL and Hisense have been rolling out RGB LED TVs that improve on the shortcomings of existing mini LED TVs to claw away the share held by OLED TVs in the premium TV market, earning recognition for quality that exceeds expectations. While they lag OLED in black rendition, contrast, and sharpness, they are assessed to have nearly overcome the drawbacks of LCD TVs.
However, as the RGB LED TV market is still in its early stage, analysis suggests they do not have an advantage over OLED in terms of production unit costs. A display industry source said, "In the case of RGB LED TVs, the cost of the LED chips that make up the RGB LED backlight accounts for most of the panel unit price," and added, "When you include the backlight and driver costs, it is effectively estimated at the $400–$600 level, similar to OLED panel production costs, and it could even be more expensive."
To make matters worse, RGB LED TVs have a higher bill of materials (BOM) count, a more complex panel structure than OLED, and production yields are still not sufficiently secured. RGB LED TVs mount from tens of thousands to hundreds of thousands of mini LED chips, and defects in the chip placement process or stabilizing the yield of the drive circuitry are critical. According to the industry, due to concerns over light uniformity, which has a major impact on TV quality, module inspection costs are also reportedly still high.
Market research firms also expect OLED TVs to maintain their position in the premium TV market for the next one to two years. Omdia forecast that shipments of TV OLED panels will increase by about 20% from the previous year. OLED TVs' standing in the premium TV market also remains solid. According to Omdia, in the premium TV market priced at $1,500 (2.1 million won) and above, OLED's share (by revenue) was 36.7% last year, is set to reach 46.1% this year, and is projected to surpass 50% next year.
Kim So-won, an analyst at Kiwoom Securities, said, "In the past, (OLED panels) mainly saw strong results in step with the LCD cycle depending on external variables such as the COVID-19 boom, but now, centered on OLED's own fundamentals, they have secured the capacity to generate more than 1 trillion won in operating profit," and previously raised the third-quarter earnings estimate for LG Display from 327.0 billion won to 485.5 billion won.