Following a period of uncertainty, the Korean government committee specially organised to decide the fate of LG Display’s proposed investments in China will come to a conclusion at its third and final meeting, scheduled for October 30th.
LG’s plans include building a $2.3 billion OLED facility in China, which will be the first LG manufacturing plant to be built outside its homeland of South Korea. According to The Investor, the committee has delayed its decision because of “concerns over technology leaks and diplomatic uncertainties between Seoul and Beijing”.
Though LG intends to capitalise on tax benefits in China by building an OLED facility there, the firm’s overseas strategy only accounts for around a quarter of its overall investment plans, with the other 75% earmarked to make improvements to operations in its home country.
Analyst Comment
One of the main reasons for building a fab in China is to access the huge amount of financial support that can be accessed by building a fab in China. Building the same fab in Korea might mean raising four times more investment capital itself. However, the Korean government’s real concern is over too much technology leaking to Chinese OLED makers as they are currently several years behind the Korean companies. (BR)
