SHENZHEN, China -- Samsung Display’s latest automotive push may have come late but it is the right direction for its future profitability, a top analyst told The Korea Herald on Tuesday.

“Car is becoming an electronic, smartphone-based device. And you need displays to go with it,” said Paul Gray, principal analyst of market research firm IHS.

“Those applications are also far more valuable. You are working with companies where you can secure businesses for three to five years as opposed to consumer electronics industry that continues to change.”

About the company’s suspended production of its organic light-emitting diode display TVs, the analyst saw little advantage of resuming the business any time soon.

Despite its leadership in smaller OLEDs for smartphones and other mobile devices, the Korean tech giant has continued to gauge the marketability of OLED TVs since the production was suspended in 2013.

Its archrival LG Electronics is the front-runner in the field but other major manufacturers are still sticking to liquid-crystal display TVs due to OLED’s tricky production and high costs.

“I think Samsung sees OLED TV as an interesting technology platform. But there are more interesting business opportunities with OLED for their capacity and expertise,” he said.

Among other things, he called TV a tough business, considering prices continue to fall due to enhanced competition from Chinese makers while products last longer.

“Nobody makes a lot of money from television.”

The display-making unit of Samsung Electronics is more recently pushing hard on automotive applications of OLED as carmakers are increasingly hoping to embrace the new technology into their fancier luxury cars.

Compared to conventional LCD, OLED boasts better color contrast and brightness.

The analyst pointed out Samsung was rather late in entering the automotive industry possibly due to group’s strategy of integrating all affiliates “vertically” into the pipeline of Samsung products.

The strategy can be compared with that of LG Display, which has worked relatively more independently and secured orders from global companies given the strong push by the board, he added.

LG Display has inked several supply deals with German luxury carmakers. More recently, there was a news report that the company will supply a 15-inch screen for the hot-selling Model 3 sedan. 

“Samsung has the technology and know-how, but to fit into the automotive industry they need more time.”

The analyst said Samsung and LG that are feeling the pinch of enhanced competition from Chinese companies should further diversify display applications beyond TVs and cars.

According to a recent survey by IHS, China is fast catching up with Korea in terms of panel production. Currently, 11 plants are operated, with 10 under construction, even though the figures include those operated by Samsung and LG.

Along with automotive applications, he predicted “microdisplays” for smaller devices like wearables could become an edge point for the leading display-makers considering all the craze about virtual reality and video streaming.

The ultrasmall displays have a screen size of less than 25 millimeters. The high-density, high-resolution screens have recently been neglected amid an industrial race for bigger and fancier TV screens.

“Microdisplays are not something Chinese fabs are set up to make. But Samsung and LG have competence not just in making panels but also in silicon, semiconductor, chemicals and microstructures,” he said.

“With smartphone and tablet businesses flatteninging out, non-Chinese companies can utilize their intellectual property and experience to develop customized microdisplays specifically for VR.”

IHS estimates about 1.4 billion smartphones will be shipped this year, of which 314 million come from Samsung. The firm predicted handset-makers would use VR to elevate their device sales, rolling out smartphones with higher graphics and performance displays.

By Lee Ji-yoon (jylee@heraldcorp.com)
Korea Herald correspondent