What Display Daily thinks: Looking the optimism from LG Display, and wanting to play devil’s advocate, you have to be wary of Chinese competition in both the TV and IT segments. Automotive continues to remain the one bright spark, but it bleeds as much as any other division, needing continued investment despite considerable orders projected for the future. Of course, the auto industry has its own issues with demand so, we have to remain cautious, but it’s the bow on top of the results that highlights opportunities pursued.
The reality for LG Display, probably equally applicable to Samsung Display, is that the company relies on mature markets that are driven by LG Electronics, and as such, it is, to some extents, hampered in its recovery, entwined as it is in what is happening in that company’s TV markets. Were LG Display truly independent, it may have more leverage and opportunity to accelerate a return to profitability, but there are too many pressures to deliver on products and services that have to function at a loss. Apple could be thrown in there because, you can’t refuse its orders or raise prices on the Cupertino behemoth.
Any normal company would have made much bigger cutbacks, that’s not say it would be good for the company to make those drastic cuts, but in pure financial terms, what would the market have accepted? The parent company’s businesses have to be fed, and the losses have to be endured for the greater good and the longer term vision. Apple cannot be denied. So, it’s a bit of an anomalous situation to be in, and the cost of borrowing is going to be hurting right now with high interest rates likely to stick around for a while.
As for profitability in the fourth quarter, there’s Apple again, which could be another bow on these financials. But the Q3 performance shows a loss that is about 50% higher than was projected by Korean financial analysts. That’s a significant shortfall. So, the real turnaround for the display industry may not come until 2025, at this rate, as the Chinese and Korean display companies continue to battle it out in very challenging economic circumstances. With war in the Middle East rattling markets, that’s going to add more downward pressure to companies operating globally.
How will this impact investments that are sorely needed in new technologies? How will this impact consolidation in the industry, something that needs to happen, particularly in the area of MicroLED development? There are more questions than answers.
LG Display Reports Q3 Financials With OLED Delivering 42% of Total Sales
LG Display reported a third quarter operating loss that fell short of analyst expectations. By business segment, the TV division accounted for 23% of sales, IT 40%, mobile 28%, and automotive 9%. OLED made up 42% of total sales.
For Q4, LG Display expects panel shipments to increase 10% QoQ. It forecasts a 20% jump in average selling price per area thanks to new high-end smartphone OLED panel shipments. The company aims to swing to an operating profit in Q4 through seasonally higher shipments and ongoing cost reduction efforts.
On large OLED TV panels, LG Display acknowledged softer premium TV demand this year. It plans to boost profitability through expanding ultra-large screen sizes and reducing material costs. For small/medium OLED, the company is ramping up mobile panel shipments from expanded capacity. It is on track to start IT OLED mass production in 2024.
In automotive displays, LG Display expects sales growth around 10% annually over the next 5 years. OLED’s share of order backlog will rise above 50% by 2025. The company targets an operating profit in auto displays next year.
