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LG Display can go down due to BOE and cheaper panels
  • Vitaliy_KiselevVitaliy_Kiselev

    The South Korean company on Wednesday announced a 437 billion won ($372 million) operating loss for the July-September period. Sales shrank 4.6% from a year earlier to 5.82 trillion won.

    A week earlier, new CEO Jeong Ho-young warned in his first message to employees that the "company's survival is at risk."

    Ramped-up Chinese production of liquid crystal display panels for TVs has put downward pressure on LCD prices, driving Taiwanese and Japanese suppliers out of the race to add capacity. The average price per TV panel has fallen by 20% to 30% from a year ago.

    Demand for LCDs is expected to rise 5% this year, but supplies are expected to grow 10%

    BOE Technology Group, China Star Optoelectronics Technology and other Chinese panel makers have built new factories with government backing. In about four years, China has outstripped Japan, Taiwan and South Korea in terms of LCD production capacity.

    Japan Display, the world's largest smartphone LCD maker (it is mix of factories of ALL major Japanese brands merged together to survive) that is struggling to secure a bailout, and Taiwan's AU Optronics, a major supplier of TV panels, have already bowed out of the race to increase production.

    Based on LG Display's cash flow, it is unclear whether the company can keep up with Samsung and Chinese competitors in terms of investment.

    LG Display makes LCD and OLED displays for both smartphones and TVs. The multipronged approach has stretched research and development funding and capital spending thin.

    The company "should suspend domestic LCD plants" now that it is losing money, said an analyst in South Korea.

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  • Vitaliy_KiselevVitaliy_Kiselev

    LG Display plans on cutting its production of LCD panels in 2020 by 50%. The company has already announced its sole focus on OLED panels, which are expected to account for 60% of its total panel sales in 2020. "We plan to downsize at the P7, P8 LCD TV factories in order to focus more on our strengths and streamline what's necessary," said LG Display CFO Seo Dong-hee at LG's recent third-quarter earnings announcement.

    For 2019, LG Display will be probably second in LCD TV panels production after the Chinese BOE but for 2020, it will probably become fifth in this market niche after BOE, CSOT, Innolux and HKC. "LG Display is estimated to ship up to 48.6 million LCD panels for TV this year, but this figure is to fall to 27 million in 2020 to show a 44% fall," said IHS Markit in a recent report.

    It's the slow end of Korean TV mass panels.

    And Apple can no longer save them.

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