LX Semicon is speeding up efforts to target the IT organic light-emitting diode (OLED) display driver IC (DDI) market. As competition with rivals such as Taiwan's Novatech erodes profitability, and with smartphone shipments expected to fall 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, in displays used in smartphones, TVs, and tablets, controls each individual pixel to help render sharp, vivid images. The No. 1 player in the DDI market is Samsung Electronics, with about a 30% share globally, followed by Novatech and LX Semicon.
According to FnGuide on the 20th, LX Semicon's operating profit forecast for last year is 105.3 billion won, which is expected to decrease about 36.9% from the previous year (167.1 billion won). As competition intensifies in the smartphone market and TV demand also declines, DDI supply for OLED panels has fallen, worsening profitability. Kim Jong-bae, an analyst at Hyundai Motor Securities, said, "With shrinking market share in smartphones and weakened TV demand, both small and large DDI results continue to be sluggish."
LX Semicon's strategy is to secure profitability by targeting the IT market, including tablets, where OLED adoption is rising sharply. As devices such as Apple's iPad accelerate the shift from liquid crystal display (LCD) panels to OLED, OLED shipments in the IT market are increasing rapidly. According to market research firm UBI Research, 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 impacts such as mid- to long-term demand decline and customer diversification," but added, "However, as the OLED mix within IT products is expected to gradually increase, it is likely to drive a recovery in (LX Semicon's) profitability."
With the impact of higher memory chip prices set to materialize in earnest starting this year, the prevailing view is that profitability improvements will be elusive for component makers supplying products for smartphones and other devices. As the artificial intelligence (AI) industry grows, demand for server DRAM and other products is surging, and supply is failing to 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 component industry official said, "Higher launch prices for products such as smartphones and PCs this year are only natural," adding, "The shipment volumes we projected when drawing up last year's business plans are being revised down, and component makers are also facing 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 customer last year, DDI shipments have been hit. LX Semicon has diversified its customer base by supplying DDIs to China's BOE and others, but as BOE also began sourcing DDIs from Novatech, the company is facing declining shipments and pressure to lower component prices.