According to Korea-based ETNews (Korean), Mountain View, California-based Google has approached LG Display and offered a strategic investment of ₩1 trillion (around US$880 million) toward constructing a single line in a Gen. 6 small/medium flexible OLED fabrication plant. Instead of engaging LG Display toward establishing a long term supply agreement Google is seeking to establish a strategic relationship with one of the world’s largest supplier of displays.
Google is most likely experiencing difficulties acquiring OLED displays for its flagship Pixel smartphone. The world’s dominant supplier of smartphone OLED displays is Samsung, but Samsung will be using its own OLED supply for its newly launched Galaxy S8 and S8+ smartphones. In addition there is speculation that Apple has secured most of the rest of Samsung’s OLED capacity for the next iPhone, which is expected to be named iPhone 8 or iPhone X. With Samsung’s OLED capacity earmarked for the Galaxy S8, S8+ and the next iPhone, Google needed to find another supplier and for the long term. The switch from LCD to OLED is underway and when Apple signals the smartphone world that OLED is the display technology of choice with its next iPhone all major brands will probably transition to OLED as well especially for their high-end smartphone offerings.
LG Display is currently building out two Gen. 6 flexible OLED fabrication plants: E5 in Gumi and Paju-based E6. E5 is expected to start production in Q3’17 while E6 is slated to come online in the second half of 2018. About $1.7 billion will be invested toward constructing the Gen 6 (1500x1850mm) flexible OLED fab; E6 is expected to have a monthly input capacity of 15,000 substrates. LG Display has invested $900 million to build its E5 fab, which is slated for production in 1H’17 with an initial monthly input capacity of 7,500 substrates or about 1.5 million 5.5-inch flexible OLED displays.
If Google and LG Display sign a strategic investment agreement flexible OLED displays earmarked for Google will probably be manufactured at LG Display’s E5 fab. Google’s investment would be coming at an important time for LG Display as the company builds its flexible OLED capacity for smartphones and other small/medium applications.
LG Display has been the main supplier of displays to Apple for many years. Apple’s iPhones, iPads, iMacs, MacBooks, etc. are mostly supplied by LG Display due to the company’s well received and superior IPS LCD technology. But if Apple switches to OLED displays for the company’s iPhones it will be a major blow to LG Display. Samsung has been honing its smartphone OLED display technology for many years and it will likely be an uphill battle for LG Display to catch up. Although Apple might use LG Display as a second or third supplier of flexible OLED displays in the future, the probability that it will be sooner than later seems low. LG Display needs Google as much as Google needs LG Display.
Google is expected to announce a new Pixel smartphone this fall and to secure a reliable supply of flexible OLED displays via a strategic relationship with LG Display makes a lot of sense.