These days LG is synonymous with OLED – the latest in a long line of incremental developments on the path to higher-contrast and thinner TVs. The Korean giant’s billion-dollar gamble would appear to have paid off, with LG now producing panels for almost every TV manufacturer out there. But although the flashy new technology is the perfect fuel for superlative-laden headlines, behind all the bluster LG is being propped up by screen technology that is several decades old.
OLED was certainly everywhere at this year’s CES. There were TVs from all the major manufacturers with one notable exception, along with LG Electronics showcasing a 77-inch 8K screen, and an eye-catching rollable screen that disappears down into its base when not in use.
Unsurprisingly, that one notable exception, the one manufacturer that has resisted OLED’s charms as a TV technology is arch-rival Samsung, which is banking instead on Micro LED. Although paradoxically the world’s biggest TV manufacturer is more than happy to use OLED in its smartphones, and even makes OLED screens for the Apple iPhone XS.
However, the television business is tough these days, and only last week LG Electronics posted its slowest quarterly profit growth in two years, citing higher marketing costs and increased competition in the high-end TV market. The company’s fourth-quarter operating profit dropped 80 per cent, a precipitous fall that was partly driven by increased losses in the company’s struggling mobile phone business. The outlook is made worse by a global economic slowdown, but it’s the increased competition for high-end TV sales that is most worrying for LG.
Until recently, OLED TVs have been positioned as a high-end product, but the technology has now reached a level of maturity in terms of market penetration and peak performance. That means LG will need to move OLED down to the mid-range if it wants to grow market share: and that means lower prices and finer margins. As a result the company has, as it turns out very sensibly, focused on high-value-added products such as wearable screens, to offset the decline in large screen panel prices due to increased competition from China. And that's why Apple has found itself in the position of being LG's unlikely cash cow.