LX Semicon is accelerating its push into the IT organic light-emitting diode (OLED) display driver IC (DDI) market. As competition with Taiwan's Novatech and others worsens profitability, and with smartphone shipments expected to decline this year due to rising memory chip prices, the company aims to preempt the IT market—including tablets, where DDI adoption is increasing.
A DDI is a semiconductor that helps deliver sharp, vivid images by controlling each pixel on displays used in smartphones, TVs and tablets. The No. 1 player in the DDI market is Samsung Electronics, with about a 30% share globally, followed by Novatech and LX Semicon.
On the 20th, according to financial data firm FnGuide, LX Semicon's operating profit forecast for last year is 105.3 billion won, expected to fall about 36.9% from the prior year (167.1 billion won). As competition intensifies in the smartphone market and TV demand declines, DDI supply for OLED panels has decreased, hurting profitability. Kim Jong-bae, an analyst at Hyundai Motor Securities, said, "With shrinking market share in smartphones and weaker TV demand, weak results in both small and large DDIs continue."
LX Semicon's strategy is to secure profitability by targeting the IT market, including tablets, where OLED adoption is rising sharply. As Apple's iPad and others accelerate a shift from liquid crystal display (LCD) panels to OLED, OLED shipments in the IT market are increasing quickly. Market research firm UBI Research said global IT OLED shipments are expected to grow from 24 million units last year to 53 million units in 2029.
Kang Min-gu, an analyst at IBK Securities, said, "DDIs used in TVs continue to face negative factors such as medium- to long-term demand declines and client base diversification," but added, "However, as the share of OLED within IT products is expected to increase gradually, it is likely to drive a recovery in (LX Semicon's) profitability."
From this year, the impact of rising memory chip prices is taking full effect, and the prevailing view is that profitability improvement will remain elusive for component makers supplying products to smartphones and other devices. With the growth of the artificial intelligence (AI) industry, demand for server DRAM and other products is surging, and supply cannot keep up. For this reason, prices of memory chips such as DRAM are jumping sharply, leading to higher launch prices for smartphones and PCs.
A source in the components industry said, "Higher launch prices this year for products such as smartphones and PCs are only natural," adding, "The shipment volumes we forecast when drawing up last year's business plans are being revised downward, and component makers are also under pressure to cut unit prices."
Intensifying competition in the smartphone market is also a concern. As Novatech of Taiwan entered the DDI supply chain of LG Display, a key client last year, DDI shipments have been hit. LX Semicon has diversified its client base by supplying DDIs to China's BOE, but BOE has also begun sourcing DDIs from Novatech, leaving the company facing declining shipments and pressure to cut component prices.