What They Say
LG Display held its quarterly conference call and confirmed that it had underperformed its guidance with revenues down 13% QoQ and 19% YoY from a combination of continued disruption in China from lockdowns, weak demand and falling prices. As a result, there was a not loss of $293 million and operating loss of $375 million. Area shipments were down by 4% QoQ and ASP/m² was $566, down 14% QoQ. Revenue was down from $5.35 billion last year to $4.3 billion.
The firm reduced its capacity by 5% during the quarter. TV panels took a bigger share of revenues at 31%, up from 26% as OLED TV panel shipments continued to grow. IT share was down from 38% to 35% because of lockdowns in China. Mobile was flat in share at 24%. Q3 is expected to see growth in mid-single digits QoQ, but recovery will be limited, although ASP should rise with more TV, wearable and smartphone OLEDs.
LGD expects LCD for TV to stay weak and planned to end production of TV panels in Korea ‘sometime’ in 2023. That process will be accelerated. In response to questions, LGD said that the P7 fab in Korea is 150K/month and will go down to 90K this year and to 60K in the first half of 2023. In China, capacity is 200K and 10% will be converted for IT this year and the the rest will be converted to IT or commercial displays, whichever segment is better for LG’s competitiveness. By the second half of 2023, 40% of capacity will have been dropped.
OLED TV is seen as important for the future as is IT panel supply. The firm plans to make more custom products (‘make-to-order’ business). There is an aim to boost market share in automotive displays to over 30% in the next three years. LGD sees strength in its tandem OLED technology.
The firm said that there are no negotiations in process with Samsung for OLED panel sales for TV.
What We Think
As usual this was an interesting report although there was nothing surprising. That there are now no discussions with Samsung over WOLED is not a surprise as there have been no rumours for months. However, at some point the topic could come back as Samsung’s great QD-OLED drives more demand for OLEDs, but with very limited supply.
Elsewhere, LGDs focus on the areas where it has technological advantage is an extension of the business strategy in the past. Clearly, the firm is confident of its tandem OLED manufacturing. (BR)
