Samsung Display plans to spend 13.1 trillion won ($11 billion) developing and building next-generation displays, responding to a flood of supply and price pressure from fast-moving Chinese rivals.
In an announcement attended by South Korean President Moon Jae-in and Samsung Electronics Vice Chairman Jay Lee, the investment was presented as a move to reorganize the display industry while maintaining Samsung's global lead and South Korea's established dominance.
The government will invest about 400 billion won into next-generation displays, Moon said. The Samsung unit will build a quantum-dot display production line in Asan, about 40 miles south of Seoul, which will begin operations from 2021 with an initial monthly capacity of 30,000 panels larger than 65 inches. Production will then scale up, with a long-term development plan that stretches to 2025. The investment will help create 81,000 jobs, the company said.
Samsung and crosstown rival LG Display are grappling with a surge of competition from Chinese suppliers, such as BOE Technology Group, which in recent years have ramped up liquid crystal display-making capacity and are increasingly making inroads into next-generation screens. To offset a decline in margins and loss of clients, Samsung is moving forward with development of quantum-dot displays.
Samsung's de facto leader Lee has pledged to invest for the long term in the display business, which is one of the three main pillars — alongside memory chips and smartphones — in which the South Korean company is a world leader. The company is making a huge bet on the market as the business environment deteriorates and a trade spat between South Korea and Japan creates uncertainty about the supply of chemicals and components necessary to manufacture advanced displays.
Last week, Samsung reported a quarterly profit decline of more than 50%, though that was less of a fall than anticipated. The firm is also grappling with a downturn in the chip industry.
South Korea's largest company is the world's foremost producer of high-margin OLED displays, but it hit a snag last year when orders from Apple underwhelmed after the iPhone XS fared worse than expected.