The Korea Electronics Grand Fair 2009 has such a dense collection of small, medium, and large businesses, packed together in such a colorful conglomeration of booths, that it reminds one of a neon jungle. Two of the largest predators in this profusion of color are Samsung Electronics and LG Display. Both of them had very large lairs in which they lay in wait for unsuspecting victims. But both of them preached caution and reserve for future actions, showing that even in the modern neon jungle there is no real king.
Both representatives from Samsung Electronics and LG Display give cautious speeches about the near future of the LCD market. Both companies cited growing competition and uncertain demand for TV sets as reason for both companies to be conservative, likely referring to each other.
On the Samsung side, Chang Won-kie, president of Samsung Electronics' LCD division, said that next year in the LCD industry will be better, but the competition will be more fierce, causing profits to go down the drain once again. "Price competition poses the biggest risk factor to LCD industrial players," he said at the International Meeting on Information Display (IMID) conference yesterday. Chang said the company will not hurry to build new LCD production lines - an additional eighth-generation line and an 11th-generation plant. Samsung ranks first in the global LCD panel market, followed by its home rival LG Display.
On the LG side, Kwon Young-soo, chief executive of LG Display, also raised the possibility of oversupply next year, with panel makers raising output amid signs of an industry recovery. "There is a possibility that oversupply will occur. There is already an oversupply in monitors," he told reporters on the sidelines of the IMID fair. But he also said it was hard to predict next year's outlook because demand for LCD TVs remains uncertain. He said demand will change depending on LCD TV prices and Chinese sales.
The LCD industry, which was hit by the global recession, has been recovering quickly, boosted by big production cuts, a component shortage and strong demand from China. Samsung and LG are expected to post two consecutive quarterly profits in the third quarter, while some of their rivals are expected to turn profits during the period. However, profitability is expected to fall in the fourth quarter of 2009 and the first quarter of 2010 because of low seasonal demand.
LG is set to announce its quarterly earnings on Oct. 15, while Samsung is set to release it earnings on Oct. 30. The two rival executives also expressed their commitment to building LCD plants in China, one of the fastest growing LCD markets. Chang said Samsung will push for its new Chinese plant regardless of market conditions, stressing the importance of the Chinese market. Kwon said the company hopes to build a factory in China earlier than its Taiwanese rivals and to gain approval from the Korean government as soon as possible.
As to a next-generation LCD plant, Chang said Samsung plans to build its 11th-genration plant within two or three years. He also reiterated hope that Samsung would cooperate with Sony in investing in the envisioned 11th-generation line. Kwon said LG Display will build a next-generation LCD plant after 2012 when the company plans to start operations of its planned LCD factory in China. He also said the company looks to begin production of the second line of its eighth-generation plant in Korea in July next year.
This Korea Electronics Grand Fair 2009 drew out other lions from major Korean companies. They included Lee Youn-woo of Samsung Electronics, Nam Yong of LG Electronics, Kim Jong-kap of Hynix Semiconductors and Hur Young-ho of LG Innotek.