"Let's expand our business competitiveness based on a solid 'technology barrier.'" (Lee Cheong, head of Samsung Display)
"For us to endure, we need 'our own moat' that gives us a competitive edge and is hard to imitate." (Jeong Chul-dong, head of LG Display)
The heads of Samsung Display and LG Display said this recently during employee communication events. They emphasized that maintaining a technology gap is key to countering the aggressive pursuit by Chinese companies, likening it to a "barrier" or "moat." Both companies are building their businesses around organic light-emitting diodes (OLED), where they maintain a technological lead over China.
Both Samsung Display and LG Display, which faced a business crisis due to low-priced liquid crystal display (LCD) offensives by Chinese companies, effectively proposed "growth through strengthening technology" as the solution. But their stances on executing research and development (R&D) investment policies to realize this differ markedly. Samsung Display has steadily increased its R&D spending, while LG Display has recently reduced the scale.
◈ LGD's research and development costs are 1.25 trillion won less than Samsung D
According to the Financial Supervisory Service's electronic disclosure system on the 21st, LG Display's cumulative research and development costs for the third quarter this year totaled 1.6686 trillion won. Last year, it spent 1.7616 trillion won on R&D during this period. That is a 5.28% (about 93.1 billion won) cut this year. Accordingly, the ratio of R&D to sales also recorded 9.0%, down 0.4 percentage point (P) from 9.4% a year earlier. The industry expects that at the current pace, LG Display's R&D spending this year could end up around 2 trillion won.
By contrast, Samsung Display has increased R&D spending every year for the past five years without exception. It rose from 2.4102 trillion won in 2020 (7.9% of sales) to 2.8554 trillion won in 2022 (8.3%), and in 2023 the company invested more than 3 trillion won in R&D. Last year, it spent 3.49 trillion won (12.0%), up 11.3% from the previous year (3.1366 trillion won).
Samsung Display, a subsidiary of Samsung Electronics, is an unlisted company and does not disclose quarterly research and development expenses. However, the securities market estimates that Samsung Display executed about 10%–13% of sales as R&D on a cumulative basis for the third quarter this year, similar to last year's trend. According to Samsung Electronics' third-quarter report this year, Samsung Display posted cumulative sales of 20.3484 trillion won during the period. A securities firm analyst in electronics and displays said, "Samsung Display is estimated to have executed about 2 trillion to 2.6 trillion won in R&D on a cumulative basis for the third quarter this year."
Analysts say the divergence in R&D investment policies, despite both Samsung Display and LG Display emphasizing a "technology gap," stems from differences in results. Samsung Display has defended profitability with a focus on small and midsize OLEDs despite China's low-priced LCD offensive. In contrast, LG Display struggled in the large panel business, falling into a deficit and lacking the capacity to invest in R&D.
LG Display fully exited the large LCD panel business in April this year and reorganized around OLEDs, turning a profit in the third quarter. However, cumulative losses from 2022 through the first half of this year amount to 5.2383 trillion won.
Samsung Electronics said Samsung Display's global smartphone panel market share (by value) is estimated at 43.9% in the third quarter this year. That is up from 41.0% at the end of last year. Based on this, Samsung Display posted operating profits of 5.5665 trillion won in 2023 and 3.7334 trillion won in 2024. Cumulative operating profit for the third quarter this year also came to 2.1603 trillion won. Unlike LG Display, it has remained in the black.
◈ Lee Jae-yong and Koo Kwang-mo announce 'Korea investment expansion'… "Building OLED capabilities"
Samsung Electronics Chairman Lee Jae-yong and LG Group Chairman Koo Kwang-mo attended a public-private joint meeting related to follow-ups to the U.S.-Korea tariff negotiations at the Yongsan presidential office on the 16th and met President Lee Jae-myung, pledging to "expand domestic investment." Both Samsung Display and LG Display are expected to move to expand OLED production facilities accordingly.
At the meeting, Lee reiterated that he plans to keep the promise made in September to "create 60,000 domestic jobs over the next five years," saying, "Including R&D, we will be even more proactive in investing in domestic facilities." Samsung issued separate materials immediately after the joint meeting, saying it plans to invest a total of 450 trillion won in domestic investment, including research and development, over the next five years.
The investment plan also includes production facilities Samsung Display is building at its Asan complex in South Chungcheong Province. Samsung Display previously released in 2023 that it would invest 4.1 trillion won by 2026 to produce 8.6-generation IT OLED panels. The production line to be installed at the Asan complex is set to begin test runs at the end of this year and enter mass production around mid-next year.
Koo also said, "Of the 100 trillion won in domestic investment planned over the next five years, we will allocate 60% to technology development and expansion for materials, parts, and equipment, supporting our partners so we can enhance competitiveness and grow together." The plan Koo mentioned includes the 1.26 trillion won investment LG Display released in June. The company plans to spend 700 billion won in particular to expand its production complex in Paju, Gyeonggi Province, where it currently produces large, medium, and small OLED products.