LG Display has confirmed that it will make a $7 billion investment in a new plant that will make large and small OLEDs. The fab will be built in Guanzhou, China and LGD will have 70% of the ownership, while local partners will hold 30%. The fab will be a G 10.5 line, so optimised for 65″ and 75″ panels for TVs. The fab is likely to take a couple of years to get up to full production which is planned at 60,000 substrates per month.
LGD had its regular investor call this week (financial details here – LG Display Results 25/07/2017) and said it was down on Q1, but up on Q2 last year. As it sold fewer small panels, its blended ASP went down over the quarter, while TV panels increased. The company sold more premium products with UltraHD or OLEDs. In its call, the company said that it has seen a really good reception for its Wallpaper TV and OLED TV products. It is also seeing more demand for mobile and auto (and said that there is more interest in digital signage, but we’re sceptical of the value there). So, LGD is setting its sights firmly on OLED as its future technology.
LGD acknowledged that nobody has made a G10.5 fab before, so it is being cautious about its forecasts and will have a two phase plan. In the first phase, it will concentrate on making G10.5 substrates with oxide TFTs and at that point, it might use the fab to supply LCDs, if this makes sense at the time. Then it will work on the issues of OLED deposition to move to full OLED production and in its call LGD confirmed that it is looking closely at the possibility of using inkjet printing for this.
For plastic OLEDs, investment will be at G6 and the company is planning a new line with 30K substrate/month capacity. This level of investment means that the company will need to arrange some debt financing. The company said that the deal to have local partners is about ensuring demand rather than to give access to funds. It expects demand for OLED TVs to go up from 2.5 million next year to 6 million by 2020.
In response to a question about the leakage of technology and knowledge by building such an advance fab in China, the company said that it believes that a lot of different areas of knowledge and expertise will be needed, so it is not too worried. It has been building LCDs in its G8.5 fab in China and said that it has a solid supply chain and control system.
Analyst Comment
The two phase approach from the company reflects a certain degree of caution and risk control that we have seen from LG Display before. The company is listed on the stock exchange and so needs to ensure that its business can survive, standing alone, so that limits the degree of technical risk that is acceptable. (BR)
LG Display’s current LCD fab in Guangzhou, China. Image:LG Display
