After a long and drawn out decision-making process, the South Korean government has approved the construction of LG’s Gen 8.5 OLED facility in Guangzhou, China.
The government had reservations about the plans, which will see LG’s first ever OLED manufacturing facility built outside the company’s homeland. OLED is regarded as a major money-spinner in South Korea, so a special government committee was formed to mull over the plans.
Following the committee’s final meeting on October 30th, the South Korean government has decided to sanction the plans, which will allow LG to take advantage of China’s business-related cost incentives including lower wages and local government subsidies.
Analyst Comment
As we have previously reported, the Korean government is worried about technology leakage from a Chinese plant, however, the reality is that most of this fab is likely to be financed with Chinese money. If money raised from other sources was needed by LG Display, the money would be likely to be more costly or, the capital owners might be ‘less patient’. That would give Chinese OLED makers a big financial advantage, and as we know, “economics beats engineering”, so in the end the government had little real choice. LG Display is building a more advanced fab in Korea, so I’m sure it argued that it would keep ‘the best stuff’ in Korea. (BR)
