According to data from Displaybank, the localization ratio 4 for LCD components and materials in Korea was 80 % in 2009 (Bok 2011, p. 20).
No data were directly available for LCD equipment, so we relied on
4 Th e localization ratio is calculated as the ratio of domestic production to domestic sales of components, materials, and equipment in Korea. Although products for export are included in domestic production, exports account for only a small proportion of production.
Mitarai’s estimate for 2009 of approximately 80 % (Mitarai 2011 , p. 167).
Considering the fact that in 2002, the localization ratio for LCD components and materials was 40 % and 35 %, respectively (MOCIE 2004a , pp. 4–5), it is clear that localization has increased rapidly since the mid-2000s.
However, there are some gaps between products. Th e localization ratio of LCD components is high at more than 50 %, but on the other hand, most LCD materials are not produced in Korea (Moon 2009 , pp. 75–6).
For LCD equipment, Mitarai ( 2011 , pp. 168–9) estimated that in the TFT array process, no lithography equipment and TFT array testers were produced in Korea at all, while wet etching equipment, developing equip- ment, stripping equipment, thermal treatment equipment, laser annealing equipment, and small machines for dry etching, sputtering, and plasma CVD equipment were produced in Korea by the end of the 2000s. A large volume of module and test process equipment is also produced domesti- cally (Mitarai 2011 , p. 169).
Table 4.1 shows the LCD components, materials, and equipment suppliers located in Korea. For LCD components and materials, fi rms within the Samsung and LG groups, such as Cheil Industries and LG Chem, and Korean subsidiaries of Japanese fi rms are the main suppliers.
For LCD equipment, although some Japanese suppliers, such as ULVAC Korea for sputtering equipment, have production in Korea, most suppli- ers are small or medium-sized local Korean fi rms. 5
With regard to the rise of Korean LCD component, material, and equipment suppliers, as indicated in Table 4.1 , it should be noted that some Korean fi rms grew as primary suppliers of Samsung or LG and had a high share of the world market. For instance, SEMES, an equipment supplier to Samsung, had a 32 % share of the wet etching equipment market, 19 % share of the cleaning equipment market, and 12 % share of the stripping equipment market in 2008 (Electronic Journal 2009 ).
5 Mitarai ( 2011 , p. 168) estimated that in 2009, approximately 50 % of LCD equipment was locally produced by Korean fi rms. Shintaku ( 2008 , pp. 68–9) also indicated, based on a survey of LG Display (formerly LG Philips LCD), that in 2007 approximately 40 % of the LCD equipment for sixth-generation (G6) glass substrates at LG’s Gumi factory was Korean-made, and the percent- age was even higher for G7 at LG’s Paju factory.
Table 4.1 LCD component, material, and equipment suppliers located in Korea Product Korean supplier Foreign supplier Components Glass substrate Corning (A), AGC (J), *Paju Electric Glass (J), etc. Color fi lter Samsung Display, LG Display Dongwoo Fine-Chem (J) Polarizer LG Chem , Cheil Industries Dongwoo Fine-Chem (J), Nitto (J) Driver IC Samsung Electronics, Magnachip, Tomato LSI Backlight unit Heesung , DS , New Optics, Daesang LCD, Hansol technics, etc. Materials Cell materials Liquid crystal Merck (G), JNC (J) Alignment layer JSR (J), NCK (J), JNC (J) Spacer LG Chem, KOLON Industries JSR (J), Dongwoo Fine-Chem (J) Color fi lter materials Color resist LG Chem , Cheil Industries JSR (J), Dongwoo Fine-Chem (J) Black resist Cheil Industries , *COTEM Overcoat KOLON Industries , LG Chem JNC (J), JSR (J) Polarizer materials Compensation fi lm TAC fi lm Protective fi lm LG Chem, KOLON Industries, Osung LST, Youlchon Chem Surface treatment PVA fi lm Backlight unit materials Prism fi lm LG Electronics, KOLON Industries, LMS, SKC 3 M (A) Refl ector fi lm Refl ection fi lm Toray (J), Teijin Dupont (J&A) Dual brightness enhancement fi lm 3 M (A) Light-guiding panel materials Heesung , New Optics , LG Chem, Cheil Industries, *LG MMA Light-shaping diffuser materials Toray (J)
Equipment TFT array process Cleaning DMS, KC Tech, SEMES, STI, SFA, etc. Coater/Developer DMS, KC Tech, SEMES, STI Lithography Etching DMS, KC Tech, SEMES, STI, LIG ADP, Wornik IPS Ashing/Stripping DMS, KC Tech, SEMES, STI, LIG ADP PE-CVD Joosung, Wornik IPS, SFA Sputtering Avaco, Iruja Ulvac (J) Ion implantation Laser annealing Dukin Thermal process AP System, TEC Koyo Thermo Systems (J) Cell/Module process Alignment material coating Rabbing Mirai Company Seal patterning Top Eng., AP System, LIG AGC Spacer sprayer Top Eng., AP System, LIG AGC Liquid crystal drop lamination Top Eng., AP System, LIG AGC Scriber Mirai Company, Top Eng., NI, TEC etc. Polarizer sticking SFA, SEC TAB/COG bonding SFA, K-Eng, F-One, etc. Source: Author’s elaboration based on data from MOCIE ( 2007 ), Moon ( 2009 ), Fuji Chimera Research Institute ( 2012 ), and various magazine articles Notes: 1. * indicates a joint venture 2. Underlined Korean component and material suppliers indicate the primary suppliers of Samsung and LG 3. The letters (A), (G), and (J) beside the ‘foreign supplier’ indicate the American, the German, and the Japanese nationality of the company, respectively
OLEDs were also highly dependent on imported materials and equip- ment at fi rst. However, since Samsung proceeded to develop AMOLEDs and began to dominate the world market in around 2009, localization of OLED-related components, materials, and equipment has also pro- gressed. Considering that Samsung started mass-producing AMOLEDs in 2007, it appears that OLED-related components, materials, and equipment were localized shortly thereafter and the process was more rapid than with LCDs. Moreover, since Samsung has a demand for most OLED components, materials, and equipment, the suppliers’ positions in the world market are heavily aff ected by Samsung’s procurement actions.
By product segment, 80 % of OLED components and materials had been localized by the early 2010s (Issuequest 2012 , p. 263). In detail, the localization ratios for polarizers was 50 %, while driver ICs, EIL materi- als, ETL materials, HTL materials, and HIL materials were almost 100 % localized (Issuequest 2012 , p. 235; Kim 2012 , p. 17). Also, as indicated by Table 4.2 , the primary suppliers of most OLED components and materials for Samsung are Korean fi rms.
With OLED equipment, limited data make it diffi cult to determine the present localization ratios, but Figs. 4.1 and 4.2 show that many Korean fi rms are joining the business. Samsung is switching to domestically made OLED equipment, starting with the A2 line in 2011 (R&D Information Center 2012 , p. 305), and thus, as shown in Fig. 4.1 , Korean fi rms are becoming the primary suppliers to Samsung. Of Korean OLED equip- ment suppliers, Viatron had more than 70 % share of the world’s inline- type annealing equipment market in the early 2010s (KEIT 2014, p. 98).
As shown in this section, while the FPD sector depended on imported components and machines during the catch-up period, the intermediate goods and machines needed to produce panels in Korea are increasingly being produced domestically rather than being imported, and domestic backward linkages have strengthened since the mid-2000s.
How and why, then, did the Korean FPD components, materials, and equipment industries form? Th e factors contributing to the formation of these industries in Korea can be divided into the growth of Korean suppliers and the expansion of local production by Japanese suppliers.
Th e following sections explore the above question by focusing on these suppliers.
Table 4.2 OLED component and material suppliers located in Korea
Product Korean supplier Foreign supplier
Components
Glass substrate *Samsung Corning AGC (J), *Paju Electric Glass (J) Polarizer LG Chem, Cheil Industries Dongwoo Fine-
Chem (J), Nitto (J) Anisotropic conductive fi lm Cheil Industries
Doner fi lm Cheil Industries, Innox Driver IC/Timing controller Samsung Electronics, Silicon
Works, Anapass, TLi
Bezel Sangsin EDP
Materials
Electron injection layer (EIL) LG Chem , Cheil Industries Idemitsu (J), Merck (G), Toray (J) Electron transport layer (ETL) LG Chem , Cheil Industries
Hole injection layer (HIL) Duksan Hi-Metal , LG Chem, Cheil Industries, CS elsolar Hole transport layer (HTL) Duksan Hi-Metal , LG Chem, Cheil Industries, CS elsolar, LMS
Emissive layer (EML): Red Duksan Hi-Metal, Doosan Electronics
Dow Chemical (A) Emissive layer (EML): Green Duksan Hi-Metal, Doosan
Electronics, CS elsolar
Emissive layer (EML): Blue Daejoo Electronic Materials *SFC (Hodogaya), Dongwoo Fine-Chem(J) Organic insulating fi lm Cheil Industries, ANP
Sealing materials Innox, Nononix
Source: Author’s elaboration based on data from Kim ( 2012 ), Lee ( 2012 ), Fuji Chimera Research Institute (2013), Issuequest ( 2014 , p.142), and various magazine articles
Note: 1. * indicates a joint venture
2. Underlined Korean suppliers indicate the primary suppliers of Samsung 3. The letters (A), (G), and (J) beside the “foreign supplier” indicate the
American, the German, and the Japanese nationality of the company, respectively
Fig. 4.1 OLED equipment suppliers of Samsung (Source: Author’s elabora- tion based on data from Issuequest ( 2014 , p. 153). Notes: (1) The letters (A), (I), and (J) behind the fi rm indicate the American, the Israeli, and the Japanese nationality of the company, respectively. (2) Most of the procurement from foreign equipment suppliers excluding Ulvac are as imported goods)