Samsung and LG test folding screens in search of flexible future

November 21, 2013 1:00 pm

Samsung and LG test folding screens in search of flexible future

By Song Jung-a in Seoul

Flat screens may have been fine for smartphones but Samsung and LG are betting that curved will be king for wearable devices such as smartwatches. The South Korean companies are racing to bring flexible displays to their mobile devices. Success in doing so could give them a significant advantage over AppleGoogleand other makers of wearable devices in an area that is shaping up to be the next big battleground in consumer electronics.“The smartphone market is increasingly saturated so it is getting difficult for us to make a step forward,” Ma Chang-min, LG’s head of domestic marketing, said. “Curved display is the future technology, which will evolve into wearable displays.”

Flexible displays would allow for completely new forms of gadgets such as smartwatches or bracelets that wrap around the wrist, or tablet computers that can be rolled up and even folded to fit into pockets.

The two South Korean companies are the only manufacturers able to mass produce curved displays, while Japan Display is also trying to develop the capabilities to do so.

In the past month, Samsung and LG have both unveiled the first fruits of their research into flexible displays by launching smartphones featuring curved screens. But the critical reception to, and the hefty price tag of, these devices highlight the hurdles that still have to be overcome.

Samsung’s Galaxy Round smartphone comes with a $1,000 price tag, and LG’s G Flex phone is similarly priced at Won1m ($940), far higher than the $650 Apple sells its iPhone 5s for in the US. These high prices in part reflect the difficulty in manufacturing curved displays, which are expensive to make because of low production yields.

Analysts also point to the need for better design and software to make the final product compelling to consumers. “What can you do with the curves if the phones are not foldable,” asks Kim Young-woo, analyst at HMC Securities. “The products were hastily released just to be called ‘first’. They don’t look so compelling even for early adopters.”

Samsung’s first smartwatch, the Galaxy Gear, which has a flat rather than flexible display, received a similarly negative reception for its high price, short battery life and still unrefined features.

But the potential prize is huge. For the screens alone, aside from the broader market for devices featuring flexible displays, research group IHS Display forecasts the global market will grow sharply from just $100,000 this year to $41.3bn in 2020.

“It certainly won’t be easy to make the screens completely foldable and durable. But if they can do it, it will be a real game changer,” says James Kim, head of research at Nomura.

Yet any delays and difficulties in building a flexible-screen gadget that is both cheap enough and can excite consumers will put pressure on Samsung and LG to face an important strategic decision: whether or not to supply flexible screens to other companies, most notably Apple.

LG supplied the Retina Display that was first incorporated into, and was a big selling point, of the iPhone 4. Samsung later joined LG as a supplier of the high-resolution retina screens for the iPad and other Apple devices.

This time, analysts expect Samsung to keep flexible displays for itself, given the fact that the new panels will play a key role in its efforts to differentiate its products. But they say LG is likely to supply flexible displays to Apple.

It certainly won’t be easy to make the screens completely foldable and durable. But if they can do it, it will be a real game changer

– James Kim, head of research at Nomura

“Samsung will clearly want flexible displays to remain its own competitive edge, while LG has no choice, because it will not be profitable without supplies to Apple,” says Mr Kim at HMC Investment.

Neither Samsung nor LG will provide details on how much has been invested in research and development into flexible displays, though analysts estimate that amount to be less than $1bn each.

They say that both companies will have to spend much more in the coming years, however, to increase the production capacity and yield of flexible displays. But with the industry consensus forming around flexible displays as the next big area for technological breakthroughs, few doubt that the investment would pay off in the long run.

Samsung and LG “are best-positioned to pursue this kind of technology, given years of technology gap they have with their rivals”, says Nomura’s Mr Kim.

This article has been updated to clarify that the unsubsidised price of the iPhone 5s in the US is $650. The iPhone 5s costs $199 with a 2-year contract from a mobile operator.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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