The downturn in the display industry, and the losses at LG Display, continue to reshape LG’s companies. LG Chem is set to sell its IT materials business unit’s polarizing film and related material business to Chinese companies. This move is interpreted as part of LG Chem’s goal to focus more on its rapidly growing battery business.
The company said it would sell its polarizing film business for about 270 billion won ($200 million) to Shanjin Optoelectronics and its polarizing film material business for about 820 billion won ($607 million) to Hefei Xinmei Materials. LG Chem is selling the polarizing plate business including those targeted at the IT and automotive applications markets. The company will retain its OLED material business.
LG Chem is pivoting its focus towards the production of battery materials, an area with more promising growth potential. The proceeds from the sale of its LCD film business will be directed towards ramping up battery material production in South Korea and the US. The decision comes as the profitability of the LCD business dwindled due to competition from Chinese manufacturers. While LG Chem had previously been a major supplier to LG Display and Samsung Electronics, the cessation of LCD manufacturing by these companies prompted this strategic shift.
In the 2000s, LG Chem had aggressively invested in LCD materials, expecting growth as South Korean panel makers surpassed their Japanese rivals. However, with the rise of Chinese competitors in the late 2010s, the landscape changed. By 2017, China’s display production capacity exceeded South Korea’s. Additionally, shifts by Samsung and LG Display from TV panels to smaller, high-value smartphone panels also affected purchase volumes, further challenging suppliers.