What led LG Display to exit the LCD business?

Fri, 23 Feb 2024 16:00:00  |  Print  |  Email   Share:

Under fierce competition from Chinese companies, LG Display plans to withdraw from the liquid crystal display (LCD) business, a sector that no longer generates profit.

According to South Korean media, LG Display plans to sell its LCD production factory in Guangzhou, China, as it considers exiting the LCD sector entirely.

LG Display is planning to sell its LCD manufacturing plant in Guangzhou, China

According to industry sources, the South Korean business has received letters of intent (LOIs) from at least four companies, including BOE and China Star Optoelectronics Technology (CSOT), as well as key consultancies. BOE and CSOT are now the world's two largest LCD manufacturers.

LG Display has approached possible purchasers with an asking price of up to 1.5 billion USD for this business division, with the transaction scheduled to close by the end of June this year.

Thus, the Guangzhou LCD production factory is LG Display's first and last foreign manufacturing site.

Since its inception in 2014, LG Display has invested around $3 billion USD in its Guangzhou factory, which employs numerous innovative LCD production technologies, including IPS (in-plane switching), which increases image quality and viewing angles.

However, as was inevitable, the firm decided to exit the LCD market as it failed to compete with Chinese rivals such as BOE and CSOT.

The strong rivalry from Chinese businesses has led South Korean screen makers, including LG, to depart from the LCD industry owing to declining revenues, since Chinese competitors can always supply panels at far cheaper costs.

Another South Korean electronics behemoth, Samsung, has declared that it would discontinue making LCD panels for TVs in South Korea in mid-2022, while LG did the same last year.

What happens next?

Once the Guangzhou facility is sold, LG Display intends to raise its investment in the organic light-emitting diode (OLED) panel sector.

LG Display plans to increase investment in the OLED business. 

South Korean display makers have recently shifted their attention to OLED panels, where they have a technological advantage over Chinese competitors.

LG Display, the world's top OLED TV panel producer, intends to expand its OLED manufacturing facilities. Last March, the firm secured $1 billion in syndicated loans from global banks to expand its OLED screen production lines in Paju, north of Seoul, and create infrastructure for its Vietnam operation.

Currently, LG Display's facility in Vietnam is in Hai Phong. LG entered Vietnam in 2016 with a 1.5 billion USD initial investment project, which was the largest foreign direct investment project in Hai Phong at the time. The project focuses in the production of plastic OLED displays for mobile devices, OLED TVs, and LCD screens.

In the years that followed, LG Group made regular adjustments to boost the project's investment capital and manufacturing scale. By the end of 2022, LG Display has grown its total investment capital to $4.65 billion USD.

South Korea's biggest screen producer said it would utilize the funds to boost its competitive position in the OLED panel market. OLED has becoming the norm in the TV and smartphone markets. This screen technology is distinguished by its self-emitting points, which do not require a separate light source, allowing producers to create lightweight, thin, and flexible screen products that appeal to high-end consumers.


Source: https://en.diendandoanhnghiep.vn/what-led-lg-display-to-exit-the-lcd-business-n39519.html


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