LG Display Shifts Investment to OLED

LG Display (LGD) said that it expects supply for panels to be tight in 2017 with more of a trend to larger sizes, but it also expects a reduction in its own capacity, which will reduce output, although ASP is expected to continue to grow. Over 2017, LGD said it would invest 5 trillion won ($4.3 billion) in new facilities and will focus on new capacity for flexible OLEDs, with G6 substrates, with 70% of investments going into OLED (compared to 50% in 2016). Production at the E5 OLED fab is expected to start in Q3 2017.

The firm said that it would have capacity for 60K substrates for TV OLEDs by the second half of 2017, double last year’s capacity and volume of 1.5 million to 1.8 million units and that it has achieved an 80% yield. Don Kim, CFO, said that the company took ten years to get to that level of yield with LCD, but has achieved it in two years in OLED. It expects its OLED to be split with 40% above 55″, compared to 30% in 2016.

Responding to a question in the results presentation, LGD said that it doesn’t plan to directly compete with the new G10 fabs in China at the moment, but will decide what to do, and whether to choose OLED or LCD at that end of the market by the middle of the year.

Analyst Comment

Separately, LG Display is widely reported to have reached an agreement to supply as many as three million LCDs to Samsung’s TV business. Bloomberg reported that Samsung has requested a court arbitration with Sharp over its decision to stop supplying LCDs. It is requesting $429 million in compensation. It’s not clear what will be supplied. Samsung has been vocal in its attacks on the IPS LCD technology that LG uses (although it could always call it PLS!) (BR)