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Why Samsung is building the biggest OLED factory in the world

Samsung is set to build the world's largest-ever OLED plant in South Korea. What's behind the move? Allow us to explain.

Published onJuly 3, 2017

Samsung is set to build the world’s largest-ever OLED plant, according to a report from etnews. The new facility, said to be called “A5,” would be comprised of two buildings in South Korea’s South Chungcheong Province.

This is tipped to crank out “180,000 to 270,000 units of the sixth-generation OLED panels per month,” claims The Investor, which is roughly a 30-percent jump on its A3 plant (the current largest OLED plant in South Korea).

The Investor says this information was provided by an industry source on the condition of anonymity, and that it could cost Samsung two trillion won (around $1.75 billion) just to construct the building. Equipment costs could set the company back between $4 and $14 billion, claims etnews. Facility operations are tipped to begin in 2019.

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Though this is simply a rumor for right now, it is exceedingly likely that Samsung is seeking ways to increase its OLED output; last year, reports emerged that it would invest a whopping $6.8 billion in AMOLED displays.

A new factory would certainly help Samsung build more panels, but to what end? Here are some possibilities.

Staying on top

Samsung is already the largest producer of small displays (nine inches or less) and its Display arm is a lucrative part of its overall business. But the company is facing competition from Japan Display, LG Displayand others while the rising Chinese companies like Xiaomi, HUAWEI, OPPO and vivo have the potential to cause Samsung problems too.

A reported deal between Samsung and Apple has prompted several Chinese manufacturers to band together with the aim of securing a homegrown OLED supplier to rival Samsung. While a reported 100 million panel shipments to Apple over three years isn’t a bad prospect for Samsung, the Chinese OEMs’ smartphone market shares are on the up, and Samsung could miss out on the action.

Though investing in a better display infrastructure now will cost Samsung a lot of dough, it would give it a chance to secure its market foothold before a potential Chinese solution even gets off the ground. And it would be hard for smaller companies to compete with the prices offered by the biggest global OLED factory.

Market growth

Though LCD is still the most prevalent smartphone display type, OLED panels have been catching up, and the market is expected to continue to grow through 2023. Curved displays, meanwhile, are a current smartphone trend that analysts predict is going to continue over the next few years — and OLED is the best display type for it.

Add to this that OLED prices are dropping overall and it’s clear that they could overtake LCD on smartphones and in other tech spheres too, like smartwatches, home appliances, TVs, VR, etc.

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Realistically, there probably won’t be anything to disrupt the prominence of small OLEDs in the next five years or so. Plus, if a superior tech — like microLED — does become preferable, there aren’t a whole lot of companies that would have the capacity to deliver it on a scale like Samsung could with OLED (i.e. they won’t be able to sell it to the market at as low a price).

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Larger displays

The other major region that Samsung may need to invest so heavily in this proposed super plant is to produce larger displays. Samsung’s current factory apparently isn’t geared up to produce high volumes of the larger panels required for curved displays (The Investor‘s sources also indicate this), and, as has been previously discussed, these screens are becoming pretty hot. Even Apple is said to be joining the curved-screen party with its 10th anniversary iPhone.

Samsung Display is said to be holding a meeting next month to finalize its plans for the investments on the new plant, though it told The Investor that nothing is confirmed just yet. We’ll let you know when we learn more.

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