War risks and surging memory prices: Korean display industry faces double squeeze

According to The Financial News, the heads of Samsung Display and LG Display, the two pillars of Korea’s display industry, pledged to do everything they can to minimize damage amid the dual pressures of geopolitical risks in the Middle East and soaring memory prices. Both companies plan to respond to market uncertainty by innovating their cost structures and strengthening business competitiveness.
Chung Yi, president of Samsung Display and head of the Korea Display Industry Association, told reporters on the 12th at Lotte Hotel World in Jamsil, Seoul, before the KDIA general meeting, "If the Iran crisis becomes prolonged, the burden from rising oil prices, higher logistics costs, and increased energy prices could grow." He added, "Many display raw materials, such as films, are made from petroleum, so a rise in crude oil prices can translate directly into higher production costs," and predicted, "If the situation drags on, the burden will become heavier."
The two companies intend to overcome the fallout from the conflict through cost-structure innovation and close cooperation with partners. Chung said, "The impact of the Iran crisis is something the entire industry is experiencing together," and continued, "Our ongoing efforts to innovate our cost structure and work closely with our suppliers will be the source of our competitiveness in getting through this period." Jeong Cheol-dong, president of LG Display, also noted, "We are preparing for the possibility that the war could be prolonged," adding, "We will keep a close eye on developments and manage the situation accordingly."
On top of the war’s impact, there are growing concerns that the sharp rise in memory prices will further squeeze display makers, as finished-product manufacturers may pass their cost pressures down the supply chain. The upward trend in memory semiconductor prices that began last year is expected to continue in the first quarter of this year. Market research firm TrendForce recently forecast, "In the first quarter, prices of mainstream dynamic random-access memory (DRAM) products will jump 90–95% from the previous quarter, and the average price including both mainstream DRAM and High Bandwidth Memory (HBM) will rise 80–85%."
The rise in memory prices is expected to hit the display industry. Smartphone and television (TV) manufacturers seeking to minimize the impact of higher memory costs and maintain retail price competitiveness may pressure key component suppliers to cut their prices.
Chung commented, "It will be good news for memory makers, but for the finished-product companies that use memory, it is a difficult situation," adding, "How well we navigate this environment will be the key issue for the industry." Jeong also said, "We are watching to see what impact there will be from rising set prices," and explained, "We are monitoring the situation while responding so that memory supply and demand remain balanced."
With uncertainty in market conditions persisting, both companies plan to respond proactively by reinforcing the competitiveness of their core businesses. Samsung Display has moved early with investment in 8.6-generation Organic Light Emitting Diode (OLED) panels for information technology (IT) applications and recently shipped paid samples to major customers. The 8.6-generation IT OLED panel production line in Asan, South Chungcheong Province, which received an investment of 4.1 trillion won in 2023, will soon begin operations. Chung said, "Our 8.6-generation investment is proceeding as planned, and production will also ramp up normally," adding, "If AI technology applied to IT devices combines well with the strengths of OLED, it could create a new boom in the market and become a major business opportunity."
LG Display plans to accelerate its earnings recovery based on structural reforms. Jeong said, "We have steadily strengthened our fundamentals through business-structure improvements," and continued, "On this foundation, we will build a stable profit structure." He added, "We expect to achieve meaningful results in the first half of this year as well."
soup@fnnews.com Im Su-bin Reporter