"The first half doesn't seem to have been that bad. But the second half is hard. I hope those in semiconductors will give us prices a bit cheaper. It's really too tough. All our customers are having a very hard time." (Lee Cheong, president of Samsung Display)
"You may have been disappointed by the second-quarter results. However, excluding one-off expense, we were actually in the black. I think second-half performance will be better than the first half. There is an impact from rising memory prices, but it is at a level we can endure." (Jeong Chul-dong, president of LG Display)
Samsung Display President Lee Cheong and LG Display President Jeong Chul-dong met with reporters after finishing a booth tour at the Korea Display Industry Exhibition (K-Display 2026) at COEX in Gangnam-gu, Seoul, on the 22nd and assessed the market situation this way. The two agreed that "chipflation" (chips + inflation) is reducing demand for smartphones and IT devices and that finished goods makers are intensifying demands to cut panel prices. But they showed a subtle difference in tone in how they described second-half results and the impact of chipflation.
Lee said in a strong tone that OLED volumes for smartphones and IT devices are all shrinking due to rising semiconductor prices, expressing concern about the market. In contrast, Jeong showed confidence that the burden from higher memory prices can be withstood through cost improvements.
Industry watchers say the difference in tone in the two leaders' remarks reflects the companies' different business structures. Samsung Display is estimated to generate 80%–90% of its sales from small and medium OLEDs centered on smartphones. By contrast, LG Display's combined sales share for mobile and IT panels was 73.1% last year, with the remainder coming from TVs and automotive panels. The scope of exposure to the smartphone and IT markets, which are directly in the line of chipflation's impact, is different.
LG Display is also counting on expanded supply of premium new mobile products in the second half, a low base from the second quarter, and the effects of recent cost innovations. While Lee described the broader shock to the display market, Jeong emphasized that even if conditions worsen, the recurring "low in the first half, high in the second" pattern means better results can follow.
◇ Most of Samsung D's sales are small and medium… directly in the line of chipflation's shock
With investments in artificial intelligence (AI) data centers surging, demand has increased for high-bandwidth memory (HBM) and server DRAM and NAND flash, and memory shortages and price hikes have spread to components for smartphones and PCs. If finished goods makers pass higher memory prices on to consumers, they have to accept lower sales volume. If they cannot raise prices enough, profitability falls, and they eventually cut production or ask other component suppliers, including display makers, to lower supply prices. For display makers, it means facing both a reduction in panel volumes and pressure to cut panel prices at the same time.
According to market research firm Omdia, global smartphone shipments in the second quarter fell 4% from a year earlier. The decline was especially steep in the sub-$400 (about 600,000 won) mid-to-low-end market. Memory prices borne by some smartphone makers have risen four to five times from a year ago, and the share of memory and storage in the manufacturing cost of mid-to-low-end products has exceeded 60%.
Samsung Display is directly exposed to these market shocks due to its business structure. The industry sees Samsung Display generating most of its sales from its small and medium OLED business, which includes smartphones, tablets, notebooks, watches and automotive panels. Among these, smartphones are estimated to take an overwhelmingly large share.
According to market research firm UBI Research, Samsung Display ranked No. 1 globally in the first quarter with a 44.4% share of smartphone OLED shipments. LG Display, by contrast, was at 9.0%. Samsung Electronics' business report also stated that Samsung Display's global smartphone panel share by value was 47.3% in the first quarter. If smartphone demand falls or finished goods makers intensify demands to cut panel prices, the scope of volumes and sales impacted at Samsung Display is larger than at LG Display.
Of LG Display's sales last year, 36.8% came from IT panels. Mobile and other, including smartphones and watches, accounted for 36.3%, followed by TV at 18.6% and automotive at 8.3%. While mobile and IT also account for over 70% in total, its product lineup is more diversified than Samsung Display's, whose profit structure is concentrated around smartphones. TV, monitor and automotive businesses can partially cushion the impact of a smartphone market downturn on companywide sales.
An industry source said, "Both companies share the view that market conditions are poor due to chipflation," adding, "But because Samsung Display's absolute scale and companywide sales share of the small and medium OLED business are so large, it can feel the decline in smartphone and IT volumes and the price pressure more broadly."
◇ The "Apple effect" that makes displays low in the first half, high in the second… different degrees of chipflation impact
Apple is cited as a key factor that creates the "low in the first half, high in the second" earnings pattern for the display industry. While Samsung Electronics releases its Galaxy S series in the first half and new foldables in the second half, Apple, which accounts for around 20% of the global smartphone market, typically unveils new iPhones in the third quarter. As production of iPhone panels and revenue recognition concentrate in the second half, domestic display makers' results also grow more in the second half than in the first.
However, the extent to which Samsung Display and LG Display participate in Apple's supply chain differs. Samsung Display is Apple's largest OLED panel supplier while also selling panels to Samsung Electronics smartphones. In contrast, LG Display's smartphone OLED business is relatively concentrated on premium iPhone models. This difference in customer and product mix is cited as one reason the two leaders showed different tones when explaining second-half conditions and the impact of chipflation.
UBI Research projects this year's iPhone OLED supply at about 120 million units for Samsung Display and about 85 million units for LG Display. Samsung Display is expected to supply more to Apple and to handle panels not only for the existing bar-type iPhones but also for Apple's first foldable iPhone.
That both Samsung Electronics and Apple are defending demand better than other smartphone makers in a chipflation phase is a buffer for Samsung Display. In the second quarter, global smartphone market shares were 22% for Samsung Electronics and 20% for Apple, up 2 percentage points and 4 percentage points, respectively, from a year earlier. On the back of strong component purchasing power and premium demand, they absorbed weakness centered on the mid-to-low-end segment.
However, an industry source said, "Even if Apple and Samsung Electronics are relatively better positioned than rivals to defend the market, they cannot be free from chipflation's impact," adding, "Samsung Display supplies panels across a wide range of products for Apple and Samsung Electronics—from bar-type smartphones to foldables, from flagships to mass-market models—so the burden from marketwide volume declines and demands by finished goods makers to cut panel prices is greater."
LG Display participates in supplying higher value-added iPhone models such as the Pro and Pro Max that use low-temperature polycrystalline oxide (LTPO) OLED. It is more affected by the premium market, which has greater capacity to absorb higher memory prices than mid-to-low-end smartphones, where price sensitivity is high.
If Samsung Display described the volume decline and pricing pressure occurring across the smartphone OLED market, LG Display, citing the effect of concentrated supply of higher value-added panels in the second half, was able to emphasize better results than in the first half.
◇ President Jeong Chul-dong confident in an "LGD rebound"… efficiency gains are "clear"
LG Display is not optimistic about the second-half market itself, either. Its view matches Samsung Display's that demand for smartphones, PCs and TVs could slow due to rising prices of memory and raw materials and geopolitical uncertainties.
However, analysts say growth in the large OLED market, where LG Display is strong, can partially offset the effects of chipflation. Omdia expects shipments of large OLEDs to rise 18.8% even as the overall large panel market contracts. Notebook OLEDs and monitor OLEDs are forecast to grow 66% and 34%, respectively.
Another basis for Jeong's assessment that chipflation is "endurable" is improvements in the cost structure. LG Display posted an operating loss of 2.5102 trillion won in 2023 but reduced the loss to 560.6 billion won in 2024. Last year, it swung to a profit with annual operating income of 517.0 billion won.
Sales fell 3% from a year earlier last year, but cost of sales also fell 6.7%. The cost-of-sales ratio dropped 3.4 percentage points from 90.3% to 86.9%, and gross profit rose 31.1%. This was the result of ending production of commodity liquid crystal display (LCD) TV panels, reducing low-profit products, improving manufacturing efficiency and cutting expense.
In the second quarter this year, LG Display recorded sales of 5.6121 trillion won and an operating loss of 107.7 billion won. This reflected about 240.0 billion won in one-off expense related to workforce optimization such as voluntary retirement. Excluding this, recurring operating profit is estimated at about 130.0 billion won. Cumulative operating profit in the first half was also 39.0 billion won, marking a profit for the first time in five years since 2021. According to financial data firm FnGuide, the consensus for LG Display's operating profit in the second half is 943.3 billion won. Brokerages analyze that this could be a 57.3% increase from the same period last year.