What Display Daily thinks: We wrote, somewhat controversially, about one company getting out of the LCD materials business after Display Week 2023, and that caused a bit of an uproar at the time. The thing is, no one wants to compete with the Chinese in the display business. It’s a competitive drag, but here’s what happens now: Chinese manufacturers have won the LCD market, and can batten down the hatches, as they say.
What’s next? Obviously the OLED market. The more the LCD market, for example, is abandoned by non-Chinese companies, the easier it becomes to marshal that very same set of forces for more lucrative opportunities in OLED.
The next five years are going to be a time of withdrawal and retrenchment for LG. The display business is going to take some of the biggest hits and I doubt LG and LG Display will look anything like they do today in the next 24 months.
This is only a small part of LG’s overhaul of every aspect of its display supply chain.
LG Chem Divesting Itself of its IT Film Business
There is no sugarcoating the decision of LG Chem to get rid of what is likely to be the last vestiges of a meaningful display business, its IT film business. The company is looking to offload the business unit to concentrate on battery technologies for electrical vehicles, more environmentally sound materials (like recyclable plastics), and healthcare (drugs and medicines. The company is looking to sell its display film factories located in Ochang and Cheongju in North Chungcheong Province. Less than two months ago, LG Chem had put its naphtha cracking center (NCC) in Yeosu up for sale.
The company’s primary petrochemical business faced losses for three consecutive quarters until June of the current year. The losses amounted to 63.5 billion won ($47.4 million) in comparison to the 4 trillion won ($3.02 billion) profit they made in 2021. The petrochemical division’s average utilization rate decreased from 91.9% in 2021 to 76.0% in the current year.
LG Chem’s advanced materials division, which manufactures battery materials, showed substantial growth with almost 1 trillion won ($755 million) in operating profit in 2022, a significant increase from 14.4 billion won ($10.9 million) in 2019.
LG Chem has outlined ambitions to earn 40 trillion won ($30.2 billion) by 2030 from the three growth areas remaining. With reduced TV demand impacting the need for display films and rising competition from Chinese manufacturers, LG Chem doesn’t see much opportunity in pursuing market opportunities.
LG Chem and the Display Business
LG Chem has held a significant position in the display industry for several years. Their expertise extended to the production of liquid crystal display (LCD) polarizer films and optically clear adhesives (OCA). Additionally, the company’s IT Material Business produced triacetate cellulose (TAC) film, essential for LCD protection. Their product range was vast, encompassing automotive display surface processing film, PET film for cover windows, polarizing film, and protective film for OLED displays.
In 2019, LG Chem acquired assets from DuPont, focused on soluble OLED materials. This acquisition brought LG Chem approximately 540 patents related to soluble OLED technology, tangible assets, and production facilities. Soluble OLED displays differ from traditional OLEDs, as they utilize inkjet printing technology to place solution-type material on a panel. This method offers better color reproduction and reduced material loss compared to other OLED display methods.
Following this acquisition, LG Chem launched a new business division dedicated to advanced materials. The company aimed to establish a stable supply system for high-tech display materials. With this move, LG Chem transitioned from its traditional display sectors, such as LCDs, to focusing more on innovative and emerging technologies like soluble OLEDs.
However, as the dynamics of the display industry changed, LG Chem faced challenges. LG Display, one of LG Chem’s primary customers, was not quick in transitioning and expanding its IT OLED panel business. This, in conjunction with the overall challenges in the display sector, prompted LG Chem to reconsider its position.
