Korea to provide subsidies to OLEDs

Korea will offer more subsidies to business projects related to organic light-emitting diode (OLED) technology, a move aimed at keeping ahead of Chinese firms amid the continued oversupply in the liquid crystal display (LCD) market, said an official at Korea’s trade ministry.

The Ministry of Trade, Industry and Energy (MOTIE) has plans to allocate a new budget on OLED-related projects from next year, at the earliest,Kim Jeong-hwa, director of the electronic component policy bureau at the government agency, said during an industry forum last week.

Kim said Seoul reached a consensus to lift OLED-related industries as part of a national strategy to expand Korea’s long-time lead in the global display industry.

The government doesn’t think OLED is just a part of parts as the display could become a turning point that Korean companies can’t afford to lose,” the official said.

The remarks came as the supply glut in LCD panels for use in conventional digital devices affects the performance of Samsung and LG Display.

Fitch Ratings director Shelley Jang said oversupply is due to production from Chinese companies, which benefit from low-cost capital and receive frequent subsidies from Beijing, urging the two Korean display titans to focus more on OLED applications.

Since 2013, the Korean government has been slashing subsidies for displays. In 2013, MOTIE spent 27.6 billion won on research and development (R&D) projects. But the amount was cut to 9.3 billion won this year, raising worries that Korea’s leadership in OLEDs will be lost.

On a related note, Korea Display Association Chairman Han Sang-beom, who is also CEO of LG Display, recently told reporters the association had demanded MOTIE spend more on display research projects.

The government has praised the continued efforts by the local industries to prepare for next-generation displays such as OLEDs by operating LCD businesses,Kim said. “OLED is new and hasn’t been touched before. If necessary, Seoul will support it; however, related companies should do more and this is the major pre-condition.”

Fitch Ratings said faster-than-expected adoption of premium products, such as OLED TVs following price cuts, could provide upside to the future performance of Korean display makers.