By Greg Gao

(JW Insights) Oct 19 -- South Korean display giants Samsung Electronics and LG Electronics are planning to reduce their procurement of LCD television panels from China’s mainland starting next year, according to South Korean media report.

Analysts suggest that this move aims to decrease their reliance on the Chinese panel market, ensure a stable supply chain, and compete with Chinese electronics companies.

Industry sources on October 17 predict that, starting next year, Samsung and LG will adjust their LCD TV panel supply chains by reducing the ratio of Chinese panel companies and increasing the ratio from Korean, Taiwanese, and Japanese companies.

Market research firm Omdia forecasts that Samsung Electronics and LG Electronics will increase their procurement from Taiwanese companies such as Innolux (8% - 11%) and AUO(8% - 9%), as well as the Japanese company Sharp, which was acquired by Taiwan's Foxconn (10% - 13%).

This strategy aims to diversify their supply chain by reducing dependence on Chinese mainland panels and challenge Chinese mainland panel and electronics companies both in South Korea and globally. With the rise of Chinese companies like Hisense, Haier, and TCL, South Korean brands face intense competition.

According to Samsung Electronics’ mid-year report, regional sales in China recorded 6.3361 trillion won ($4.6750 billion) for the first half of this year. This is a 38.8% decrease from the 10.3511 trillion won reported for the same period last year.

LG Electronics also saw a decline, with last year’s first-half sales in China at 1.3488 trillion won dropping to 1.3425 trillion won this year.