Chinese panel makers BOE Technology Group and TCL China Star Optoelectronics Technology (TCL CSOT) have ramped up output since around 2019, thanks to generous state subsidies, as China chases South Korea’s projected 55% share for 2022 in an October estimate by US market intelligence firm Display Supply Chain Consultants (DSCC).

OLED panels, which use organic light-emitting diodes, share many aspects of development and production with liquid crystal display panels but require engineers with more sophisticated know-how.

“Starting from around 2018, Chinese companies have hired a host of engineers from Samsung Electronics and other South Korean companies, which made up for the shortfall,” said Yoshio Tamura, president of Asian operations at DSCC.

This echoes how Japanese LCD panel makers started losing engineers to South Korean and Taiwanese competitors around 2000. Japan subsequently fell behind South Korea and Taiwan in global share.

Now China is expected to expand its share in LCD panel production capacity to 67% in 2022.

Mini-LEDs and micro-LEDs have been seen as promising next-generation technologies. But mini-LED panels are basically LCD panels that use tiny LEDs for backlighting. With micro-LEDs, the LEDs themselves emit light, but costs have proved difficult to bring down, and the applications are believed to be limited.

In other words, if China overtakes South Korea in its share of OLED production, China will dominate virtually the entire display industry. Most Chinese-made OLED panels are small to midsize ones for smartphones, so the focus will be on whether Chinese companies acquire capabilities for manufacturing large OLED panels.

In South Korea, “the government has stepped in to halt the transfer and sale of large-screen OLED technology and manufacturing equipment to China”, Tamura said. Meanwhile, Japanese company JOLED has developed a prototype 65-inch OLED screen with TCL CSOT, with which it has a capital tie-up.

Insiders in Japan’s electronics industry remain wary of South Korea since companies there have squeezed Japanese corporations in semiconductors and LCD panels. JOLED’s move is also meant as a play against South Korean manufacturers.

But South Korean companies have already lost out to China in the race to invest in producing large LCD panels. In large OLED panels, South Korean companies are steadily going on the defensive.

For Japanese companies, which now mostly play the role of purchasing display panels and selling equipment for manufacturing them, it would not be a healthy development if business partners are concentrated in one place. Collaborating with South Korean partners in a balanced manner appears to be the prudent choice.