South Korean firms’ “TV Alliance” adds to the Indo-Pacific Drama
By Alexander M. Hynd (UNSW Sydney)
February 25, 2024.
South Korean conglomerates Samsung and LG reportedly signed a major deal in early 2024, formalising their commitment to substantial cooperation on TV set manufacturing after years of discussions. Under the terms of the new agreement, LG Display is expected to supply Samsung Electronics with millions of high-end liquid-crystal display (LCD) and white organic light-emitting diode (WOLED) panels for its TVs over the next five years.
This deal is particularly significant because Samsung and LG are long-standing rivals in domestic and international consumer electronics markets – with a history of fierce disputes over their competing TV sets. For example, in 2019 LG claimed that its latest ultra-high-resolution 8K TVs were ‘real 8K’, while heavily implying that Samsung’s 8K resolution screens were not up to standard. And in 2015 Samsung effectively made the reverse accusation about some of LG’s 4K resolution screens.
A decade on, what can account for the current pause in hostilities between these two firms and their move towards a ‘TV alliance’?
The economic logic behind this specific deal is clear. Chinese firms are rapidly gaining ground on their Korean competitors by focusing on low-cost screens. Data from August 2023 shows that, by market share, Samsung and LG are the world’s first and fourth largest TV set producers, respectively – but China’s TCL (second), Hisense (third), and Xiaomi (fifth) are surging. Together, Chinese companies accounted for 39.1% of global TV sales in the first half of 2023; while Korean companies made up only 30.6%. Although Samsung still takes first place, its strategic decision to bet big on the success of its quantum dot light-emitting diodes (QLEDs) left it with limited OLED production capabilities. Partnership with LG, which has invested heavily in OLED technology, could help Samsung to recover from this strategic setback, while boosting LG’s lagging sales – thereby securing mutual advantage.
At the same time, there is a clear geopolitical aspect to the contemporary Samsung-LG TV alliance. Both Samsung Electronics and LG Electronics massively reduced their presence in the Russian market following Moscow’s 2022 invasion of Ukraine – leaving space for Chinese firms to flourish. Moreover, the Indo-Pacific region is witnessing a trend towards intensified great power rivalry that has a strong industrial component. The Biden Administration has sought to influence South Korean companies via the Inflation Reduction Act by offering massive economic subsidies; while Chinese President Xi Jinping’s tour of an LG Display factory in Guangzhou in early 2023 similarly pointed to the politicisation of South Korea’s supply chain choices. Facing these mounting twin pressures, Korean firms have woken up to the fact that it is increasingly difficult to divorce economics from national security interests. This is as much the case for display technologies as it is for other strategic technologies, because the rise of autonomous platforms and weapons systems and platforms means that displays have substantial current and potential military applications. In fact, displays and semiconductors are the only two forms of technology included on all of the South Korean state’s core technology lists. In these hyper-competitive, high-tech, capital-intensive, and strategically-critical industries – ranging from displays, to electric vehicles, to semiconductors – cooperation between hitherto domestic rivals to overcome shared international threats is an appealing option for business elites and policymakers alike.
Therefore, the Samsung-LG ‘TV alliance’ should be viewed in the context of a broader trend towards cooperation between South Korea’s leading industrial giants. Samsung and LG are already reportedly set for Samsung Display to provide OLED screens for use in LG laptops, and a larger potential agenda between these two firms includes cooperation on other core strategic industries, such as semiconductors. Other recent examples include an October 2023 agreement between Samsung and Hyundai for Samsung SDI to provide Hyundai Motors with high-performance electric vehicle batteries, and a US$5 billion joint-venture between Hyundai Motors and a subsidiary of SK Group to jointly build an EV battery factory in the US state of Georgia.
By pooling their resources in this way, South Korea’s leading firms are responding to changing international conditions in a manner that proves they can still go toe-to-toe with their great power competitors in the key strategic industries of the future – at least for now.