Samsung SDI has successfully turned over a new leaf in its polarizing film (POL) business. Hit by sluggish operation rates and intensifying market competition, the Samsung affiliate had at one time considered undergoing restructuring.
But thanks to a combo of positive factors, the firm is now expected to reach its annual sales target of 1 trillion won, a goal it had set out in 2016.
Industry sources said on Aug. 13, Samsung SDI logged sales of 900 billion won from its POL business last year. This year, its target goal is over 1 trillion won.
Part of the success was due to the bulk orders from Chinese display panel makers in China, which led SDI to run its Wuxi plant to full capacity. The growing demand has also made it necessary for the local Cheongju plant to go full steam.
Falling demand for LCD panel films was another factor.
“Samsung Display has been gradually reducing its reliance on LCD panels for a while now, and it also cut the POL prices supplied by Samsung SDI by 10% every year,” said one market watcher. For OLED polarizing film, Samsung Display is being supplied by Japan’s Nitto Denko and Sumitomo Chemical.
Such turn of events has allowed Samsung SDI to focus more on its Chinese clients. In 2018, Samsung SDI’s total sales stood at 9.15 trillion won, meaning its POL revenues accounted for more than 10%.
SDI’s POL business began to pick up in 2018 after hitting some snags in 2017. The production lines in Wuxi became 40% faster, and the firm began to also supply OLED panel products.
Furthermore, with China expanding its supplies for Gen-10.5 LCD panels, the glut ratio for POL has fallen to 3.3% this year, according to market research firm TrendForce.
This is much lower than the ratio of 6.9%, 5.6% and 6.5% from 2016 up to last year. There could be more orders coming from Samsung Display, once it begins to invest in QD OLED in earnest.
One downside is the difficulty in the low profitability of the business. Chinese suppliers are also adding more production lines, which could lead to excessive supply. “Samsung SDI will have to sell more of its OLED panel POL to maintain both sales and profitability,” said one market watcher.
The Elec is South Korea’s No.1 tech news platform.