Samsung Electronics, LG Electronics, SK Hynix, and other Korean companies are expected to capitalize on the U.S. government’s continued sanctions against Chinese companies.
The ban prevents U.S. firms, or companies using American technology or software, from giving material assistance through trade to Huawei to manufacture its chipsets used in its connected devices. Citing national security risks, Washington also recently blacklisted dozens of China’s tech firms, including its largest chipmaker SMIC.
New sanctions are set to target TCL, one of the leading TV makers in China. U.S. Department of Homeland Security Acting Secretary Chad Wolf recently said his agency reviewed the Chinese TV maker to see whether it had planted security-bypassing backdoors into its TV sets.
“As an example, the DHS is reviewing entities such as the Chinese manufacturer TCL. This year it was discovered that TCL incorporated backdoors into all of its TV sets, exposing users to cyber breaches and data exfiltration,” Wolf added.
Industry officials said that if TCL is restricted from selling TVs in the U.S., Korean TV makers Samsung and LG will benefit from the move. Among the two local TV makers, LG will be specifically able to reap benefits given the company has been fiercely competing with the Chinese firm in terms of global market share.
“Though nothing has been decided yet, LG Electronics’ TV business will likely to be boosted in the U.S. market,” said a local industry official, who declined to be named. According to market researcher Media, LG’s global share came to 11.6 percent in terms of shipments in the third quarter, following Samsung’s 23.6 percent. TCL was the third-largest player with a 10.9 percent share.
Industry analysts forecast LG Electronics will continue to see its share price rise next year as expectations are growing that the world’s No. 2 TV maker will improve its market share in North America.
LG already succeeded in laying out its future vision to investors Wednesday when the company announced it had agreed with Magna International to establish a joint venture for manufacturing electric vehicle (EV) components. LG said the tentatively named LG Magna e-Powertrain would be launched in July 2021, with the company owning a 51 percent share in the $1 billion-invested joint venture. Headquartered in Incheon, west of Seoul, the company will produce motors, inverters, and onboard chargers.
Based in Canada, Magana International is the world’s third-largest vehicle parts supplier. Given the company had been engaged in U.S. tech behemoth Apple’s self-driving EV-making efforts, called Project Titan, shares in LG Electronics soared by its 30 percent daily limit-up that day as investors anticipated the joint venture could potentially provide components to Apple’s EVs. The iPhone maker recently publicly announced that it plans to roll out its first EV in 2024.
Other than the Apple car issue, an industry official here said LG’s future growth could be even higher because its home entertainment division, which supervises the TV business, is expected to benefit from U.S. sanctions on TCL directly.
The North American market is one of the two strong footholds of TCL in terms of TV sales. According to Omdia, TCL’s regional sales in 2020 are expected to account for 31.7 percent of its total and 0.3 percentage points higher than the company would generate from China.
In semiconductors, leading memory chip makers, Samsung and SK Hynix will benefit from Washington’s clampdown on Chinese firms.
Due to Washington’s sanctions, Chinese chipmaker SMIC has been prevented from accessing technology to produce semiconductors at the advanced level of 10 nanometers or smaller.
SK Hynix is also reportedly witnessing increasing orders to manufacture chips based on its 8-inch foundry business. The pandemic has increased demand for image sensors, and power management and display driver integrated circuits.
