By Han Joo-yeob
powerusr@ddaily.co.kr

Samsung Electronics is rapidly increasing purchase of display panels from BOE, China’s biggest panel manufacturer. Market experts attribute the increase to Samsung’s expanded production of low-end smartphones.

According to DisplaySearch, a market research firm, Samsung Electronics bought 147 million smartphone LCD (liquid crystal display) panels from BOE in 2013, which was a whopping 52.8 percent growth over the previous year. The number accounts for 30.7 percent of the total amount of smartphone display panels purchased by Samsung’s Wireless Business Division in the year. This indicates that three out of the 10 Samsung smartphones are mounted with BOE’s LCD panels. Observers in the industry presume that most of the BOE display panels are used in low-end phones as Samsung Electronics’ smartphones for the premium and middle market models are adopting the OLED (organic light emitting diodes) panels.

Much indebted to the increased sales to Samsung Electronics, BOE sold display panels for 180.7 million units in 2013, which is a 29.6 percent growth over the previous year. BOE ranked third in the industry in terms of sales volume. But in terms of sales value, it came in eighth (4.44 million) since most of its products are for low-end models. It is also presumed that Samsung is mounting BOE display panels on its low-end smartphones mainly for their low prices. Industry experts say that BOE maintains a low cost strategy to expand its market share. As the Chinese firm sells over 80 percent of its products to Samsung, its sales will automatically grow when Samsung increases the shipment of smartphones, they say.

BOE is expected to continuously increase the shipment of display panels for smartphones since Samsung Electronics is placing an emphasis on the production of low-end phones. Samsung's vice president for the mobile business Kim Hyun-joon said in a conference call for announcing the first-quarter earnings of the company on April 29 that the market of low-end smartphones, whose prices range from 0 to 0, is estimated to reach 200 million in 2014, up 20-30 percent from last year. Samsung plans to launch products under 0, while trying to differentiate its low-end products from others with localized functions, such as user interface, large screens and dual SIM.

Another market research firm Strategy Analytics recently forecast that the demand of smartphones over 0 is not expected to rapidly grow for the time being since the global smartphone penetration rate has already reached a 30 percent level. The prediction implies that the future smartphone market will be driven by low-end models under 0. In line with this trend, Samsung Display, which supplies premium OLED displays to the Wireless Business Division of Samsung Electronics, is trying to diversify its lineups with such products as the medium-priced HD OLED panels.