South Korean government delays Samsung's Suzhou LCD production line sales approval, or will be delayed

The news that Samsung sold the 8.5-generation line in Suzhou has been rumored for a long time, and the negotiation of cooperation with the acquirer has been basically determined. However, recent news reported that affected by the epidemic, the South Korean government has postponed the approval of "TCL Technology's acquisition of Samsung's 8.5 generation line in Suzhou", which indicates that the sale and transaction time may be delayed.

It is reported that the LCD panel design, process, manufacturing and driving technology used in Samsung's Suzhou 8.5-generation line have been designated as South Korea's national core technology and need to be approved by a special committee. In October, a committee composed of experts in the display industry had already held a meeting to evaluate the impact of the sale of Samsung’s Suzhou Gen 8.5 line on South Korea’s national security and South Korea’s industry.

According to the plan, the special committee will hold several meetings before deciding whether to approve the acquisition of Samsung's 8.5-generation line in Suzhou. However, due to the impact of the South Korean epidemic, the evaluation meeting of the special committee cannot be held temporarily, which means that the South Korean government will delay the approval time.

In fact, the price of LCD panels has been dropping for a long time, and head panel companies are facing weak profits or even losses. Coupled with the strong rise of the panel market in mainland China, the cost performance is very high, further impacting Japanese and Korean head panel brands, especially Samsung and LGD.

Under the influence of this general environment, Samsung and LGD have reduced or suspended production in response to the LCD panel market, which is constantly falling prices, in order to reduce losses. Not only that, Japanese LCD panel companies have also announced the cessation of LCD panel production.

CINNO Research, a market research agency, released a report in March of 2009, stating that SDC (Samsung Display) is accelerating the shutdown of LCD production capacity due to the new crown pneumonia epidemic. The shutdown plan may be advanced to the fourth quarter of this year, involving three large-size LCDs in Korea Panel makers, as well as the 8.5-generation line in Suzhou, which has not been shut down before.

In January of this year, the relevant person in charge of LG Display revealed that it would close the LCD panel factory in South Korea for the production of TVs before the end of the year. In addition, Panasonic has also withdrawn from the LCD business and will terminate production in 2021. Now Mitsubishi has also stepped into the ranks of giving up the LCD panel business. However, in early 2020, an epidemic disrupted the economic rhythm, and also disrupted the sales rhythm of Samsung's 8.5-generation LCD panel production line in Suzhou.

It is understood that Samsung's Suzhou 8.5-generation line has three shareholders: Samsung Display, Suzhou Industrial Park State-owned Assets Holding Development Co., Ltd., and TCL Huaxing Optoelectronics. They hold 60%, 30% and 10% of the production line.

Earlier, according to foreign media SamMobile, Samsung recently sold its bankrupt LCD business to TCL’s display division, China Star Optoelectronics Technology CSOT, for US$1 billion (about 6.9 billion yuan). TCL Technology originally planned to complete the delivery of Samsung's Suzhou 8.5-generation line on January 1, 2021. Now the Korean government has delayed the acquisition approval, and the delivery date of Samsung's Suzhou 8.5-generation line may be delayed.

All of these sales are based on the impact of severe decline in LCD panel prices, weak demand, and fierce competition. However, the emergence of the epidemic has ushered in a turning point in the LCD panel market. Not only has the global display demand greatly increased, the price of LCD panels has also rebounded sharply. LCD panels suddenly become profitable, and it is reasonable for panel companies to postpone sales or shut down production lines.