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| LG Display's Paju plant in Gyeonggi Province / Courtesy of LG Display |
Company focuses on advanced OLEDs to fend off China threat
By Baek Byung-yeul
LG Display is set to close its LCD TV panel-manufacturing plant in Paju, Gyeonggi Province this year as the company is losing its competitiveness in the flat display business due to Chinese rivals producing cheaper panels, according to industry sources, Wednesday.
The display panel maker is expected to discontinue LCD TV panel production at its P7 plant this month, sources said. After completion in 2005, the P7 plant began producing LCD TVs in 2006, making LG Display a leading LCD producer.
Though Korean display panel makers have led the global panel market for more than a decade, the booming LCD business had been declining since 2017 due to Chinese rivals flooding the market. The Chinese companies, which received enormous amounts of subsidies from the Chinese government, were able to provide LCDs at much cheaper prices.
Consequently, the Chinese panel makers caused a supply glut of LCDs, leading LG Display to reduce its LCD production and shift its focus to high-value and high-priced organic light-emitting diodes (OLEDs).
With decreased demand for display panels this year due to the global economic downturn, LG Display has officially said that it would close its LCD production in Korea sooner than expected.
"The P7 is going to be closed six months to a year ahead of what we have said," Kim Sung-hyun, chief financial officer of the company, told investors during the earnings conference call for the third quarter in October. "We cannot clearly tell the specific time as we are communicating with our customers and employees."
LG Display said in a regulatory filing on Wednesday that the company is "considering the termination of production of the domestic LCD TV production plant. The company will announce it again as soon as it is decided according to the relevant procedure."
Once its LCD production is discontinued in Korea, LG Display will continue producing LCDs only at its Chinese factory in Guangzhou.
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| LG Display's transparent OLEDs are displayed at SM Entertainment's Kwangya@Seoul flagship store, Nov. 30. Courtesy of LG Display |
LG Display plans to offset its reduced LCD business with OLEDs. Its OLED business has been growing fast, as the company produced 3.3 million panels in 2019, 4.5 million in 2020 and 7.5 million in 2021. The company is also actively increasing the use cases of its OLEDs such as for in-vehicle displays or transparent OLEDs for outside advertising.
Kim Jung-hwan, an analyst at Korea Investment & Securities, predicted the company to see an operating loss of around 1.2 trillion won ($926 million) in the second half of 2022, but the company will soon be able to log an operating profit in the second half of 2023.
"In the second half of the year, it is expected that the company will make an operating profit of 900 billion won by improving the panel profit ratio and normalizing its OLED business thanks to the recovery of set demand," the analyst said.
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