Alfred Poor: OLED Ceasefire, LG and Samsung Drop Patent Suits (analysis)

Alfred Poor: LG Electronics and Samsung execs are dropping their OLED patent lawsuits and countersuits. Just in time to fight cheap 4K panel makers. Here’s why that’s good news. Analysis.

aNewDomain.net — AFP reported today that Korean display giants LG Electronics and Samsung have agreed to a ceasefire in their patent wars. They are dropping their respective lawsuits over patent infringement of OLED and LCD technologies.

It’s an unexpected development that should bear significant implications. Samsung and LG reps, finding it better to switch than fight, say the two are exploring ways to work together. Patent wars cost consumers in the long term, so this is ultimately good news for stockholders and consumers alike.

In a statement, Samsung execs said “we two should focus more on cementing our leadership in the global market by cooperation, instead of engaging in all-consuming patent disputes.” LG’s statement offered the strategic observation that “what’s most important for both of us is upgrading our competitiveness globally.”

LGE 55 inch OLED

Photo credit: Alfred Poor for aNewDomain.net

David and Goliath

So what is not being said here? While LG and Samsung have been playing “mine is bigger than yours” in the LCD and nascent OLED TV markets, display makers in Taiwan and in mainland China have stolen a march on them with the new, higher resolution UHD — or “4K” — LCD panels.

Leaders at major brands had hoped that these new higher resolutions would prompt new demand from consumers. That would in turn command higher prices, producing larger profits than the current HD (or “1080p”) television panels that are today’s norm.

Instead, these lesser-known manufacturers have produced UHD sets that are priced only slightly above equivalent HD sets. While Samsung and LG are selling 55-inch 4K sets for about $4,000, Seiki Digital has a 50-inch 4K model that sells for less than $1,000. There is no extra profit margin available in that pricing.

So it appears that Samsung and LG each decided that the other Goliath isn’t the biggest competition in town. Rather, the enemy amounts to all these cut-rate Davids — smaller firms who churn out low-cost panels in a high demand market.

It will be interesting to see what cooperation develops between the two industry leaders, especially in the area of OLED panels. Already established as a premium technology for handheld mobile devices, it remains to be seen if they can be manufactured affordably in large-screen television sizes. LG and Samsung have taken very different paths to their OLED sets (which are only shipping in very-limited quantities at this point).

For example, Samsung uses separate red, green, and blue OLED emissive materials to create their color panels, while LG uses a mix of materials to generate white light, and then puts red, green, and blue color filters over the sub-pixels to create a full color image. Another difference is that Samsung relies on relatively expensive poly-silicon technology for the backplane of its panels, while LG is using the newer and less-tested metal oxide layer for its backplane.

As a result, it may be difficult to cross-pollinate their OLED TV projects through cross-licensing of their separate patent collections. Still, the end of the lawsuits may help both companies focus their energies on other competitors.

For aNewDomain and everything HD, I’m Alfred Poor.

Based in PA, Alfred Poor is an award-winning tech journalist and a world-renowned expert in display technologies. He’s also our senior editor covering displays and other consumer tech for us here at aNewDomain.net. Email him at Alfred@aNewDomain.net and follow him on Twitter at @alfredpoor.

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Alfred Poor