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Plunge of 14.39%! In the U.S.–China Tariff War, This Country’s LED Industry Is the First to “Take the Hit”?
Staff Reporter: Ouyang Jing
According to recent disclosures on the Korea Financial Supervisory Service’s electronic information system, Korea’s major display driver IC (DDI) maker LX Semicon saw sales to key customers fall from KRW 531.7 billion in the first half of last year to KRW 455.2 billion in the first half of this year—a year-over-year decline of 14.39%. At the same time, Samsung Display has recently reorganized its small- and medium-size display division to respond to competition from Chinese companies such as BOE; in addition, Seoul Semiconductor expects its sales in Q3 2025 to decline by about 10.2%–16.9% year over year. The performance downturn and restructuring among Korea’s leading LED companies reflect the pressure facing the country’s LED industry. The U.S.–China tariff war has had a profound impact on the global LED landscape, and—unexpectedly—Korea’s LED industry has become a “casualty” in this context. This also highlights the systemic difficulties the Korean LED sector is confronting.
The primary reason for Korea’s sluggish LED industry is its high dependence on external markets and the direct shock from U.S. tariff policy. The tariff sparring between China and the United States has intensified uncertainty in the global trade environment. Despite transitional relief measures, tariff barriers have already produced irreversible effects on the world economy. The additional, reciprocal tariffs imposed by the United States on major economies have raised the costs of global merchandise trade, directly eroding the export competitiveness of Korean LED products. In LED display panels in particular, Korean firms’ once nimble go-to-market strategies between China and the U.S. have been upended, forcing them to reconfigure their global supply chains.
Another key factor is the rapid rise of Chinese companies and their significant technological gains. In recent years, Chinese LED display makers—bolstered by innovation—have surged ahead, overtaking Korea across the LCD panel segment and aggressively catching up in OLED. China possesses a strong LED industrial base, a complete ecosystem, and supportive national policies; it has designated Micro LED as a priority development direction, with multiple firms investing heavily and achieving breakthrough progress. Through these innovations, Chinese LED companies have sharply improved product competitiveness, directly threatening the traditional advantages held by Korean firms in premium markets.
Korea’s own structural weaknesses have also contributed to the downturn. Although Korea maintains leadership in OLED, it lags in iLED (inorganic light-emitting diode) and remains highly dependent on imports for related LED epitaxy, chips, and materials. Korea’s Ministry of Trade, Industry and Energy has acknowledged that the iLED chips and materials currently needed are heavily import-dependent. This reliance makes Korea’s LED industry particularly vulnerable amid global trade turbulence. At the same time, the sector faces a dilemma in technology road-mapping: iLED technology—especially Micro LED—is viewed as the next-generation display poised to disrupt OLED. Because it uses inorganic materials, it offers advantages in lifespan, brightness, image quality, and energy efficiency, and it avoids the “burn-in” that may occur with long-term OLED use. However, the iLED industrial chain differs markedly from OLED and is closer to the semiconductor domain, making it harder for Korean companies to leverage their existing strengths.
In addition, Korea’s LED industry is hindered by relatively limited domestic industrial support and slow strategic adjustment at the corporate level. Compared with China, Korean policy support for LED development has been weaker and more fragmented. While Korean companies are technologically strong, their strategic shifts have often lacked flexibility and speed in the face of market change. Under competitive pressure from Chinese firms, Korean players did not pivot in time to niche segments where they could hold stronger advantages, leaving them without new growth points when their traditional strongholds came under attack.
Future Development of the Korean and Chinese LED Industries
Looking ahead, the competitive and cooperative landscape between the Korean and Chinese LED industries will become increasingly complex. Korea’s LED sector may go through an adjustment period, improving competitiveness through greater R&D investment and industrial consolidation. On July 15, Korea’s Ministry of Trade, Industry and Energy (MOTIE) announced that the government will invest a total of KRW 484 billion (approximately USD 350 million) by 2032 to develop inorganic light-emitting diode (iLED) display technology. On August 5, ELP announced that, in collaboration with Sungkyunkwan University, Seoul National University, Hanyang University, the Electronics and Telecommunications Research Institute (ETRI), and the Korea Photonics Technology Institute, it had for the first time achieved active driving of Micro LED on a flexible substrate using only oxide TFTs—breaking through a key technical bottleneck.
Korea’s recent actions aim not only to maintain its position in the global display supply chain but also to drive a broader economic transformation through investments in next-generation display technologies. Whether Korea can achieve a commercial breakthrough in iLED will be a key variable in its response to global industrial competition.
China’s LED industry will continue its rapid ascent and play an increasingly important role in the global market. In this worldwide race that will shape the display industry over the next decade, both China and Korea will devote significant resources to developing technologies such as Micro LED and QD-LED (quantum-dot LED, also referred to as nano-LED), while cultivating their domestic industrial ecosystems. Korea hopes to replicate its success in OLED, whereas China seeks to “overtake on the curve.” This competition will accelerate overall LED technology advancement and broaden application fields.
Lessons for China’s LED Industry
China’s LED industry should draw important lessons from the current difficulties facing Korea’s LED sector to avoid repeating the same mistakes.
First, China’s LED industry must be wary of the harm caused by overreliance on price wars. For years, the sector has been trapped in a vicious cycle of “low margins → insufficient R&D investment → product homogenization → greater dependence on low pricing to win orders → further margin compression.” Over the past four years, even as LED market demand grew, price declines far outpaced volume growth, severely squeezing corporate profitability. Such destructive competition not only undermines earnings but also weakens innovation capacity and long-term competitiveness.
Second, China’s LED industry must strengthen core technology R&D and independent innovation. Korea’s experience shows that lacking self-sufficiency in core technologies and key materials leaves the entire industry vulnerable to shifts in the global trade environment. Although China has made significant progress, gaps remain in high-end chips, critical materials, and advanced equipment. Going forward, Chinese LED companies should increase R&D spending, break through key technologies, and build a self-reliant, controllable industrial chain.
Third, China’s LED industry needs to emphasize supply-chain security and diversified deployment. The U.S.–China tariff war and changes in the global trade environment demonstrate the high risks of relying too heavily on a single market or a single supply chain. While maintaining global competitiveness, China’s LED sector should enhance the security and resilience of its supply chains—by developing diversified markets to reduce dependence on any single market; establishing a global production network to avoid trade barriers; and strengthening autonomy over key materials and technologies to reduce external dependence.
Conclusion
In sum, China’s LED industry should learn from Korea’s experience to avoid excessive price wars, strengthen core technology R&D, safeguard supply-chain security, and advance value-based competition—thereby achieving high-quality development and enhanced international competitiveness. Only through technological innovation, quality improvement, and service optimization can China’s LED industry move from the “red ocean” of cost battles to the “blue ocean” of a long-cycle ecosystem built on technology and services, achieving sustainable development.
