What Display Daily thinks: Korean companies probably remember what they did to the Japanese in the display business and can see the writing on the wall as Chinese manufacturers use similar tactics in the display business. So, they are moving to higher ground, occupied by OLED technology, and looking to abandon the detritus of their LCD businesses.
On the other hand, abandoning businesses, or selling them to your competitors in this case, isn’t necessarily a great policy, either. If you are in the display business and you have capacity, sell displays, all of them, any kind. Or, find a way to hem in your competitors by selling to someone who is going to compete with them. I wish I could say that was India or Vietnam, but the infrastructure just isn’t there right now.
But, what good comes from leaving the field of LCD battles to Chinese manufacturers and hoping that you can dominate on the hill of OLEDs? And the real question that we have to ask is, how bad is the display business right now? With the exception of orders from Apple, what else is driving sales?
LG’s Plans for its LCD Factory in China
A Chinese media outlet reported that LG Display plans to fully operate the Guangzhou LCD factory by next year and has stopped discussions about selling the factory. LG Display responded to this by labeling the news as mere speculation. Currently, only half of the Guangzhou LCD factory is in operation. In a recent quarterly earnings conference call, LG Display addressed rumors about the factory and stated that no decisions have been made yet regarding its assets or operation.
The future operation plans for the Guangzhou LCD factory are tied to LG Electronics and Samsung Electronics’ 2024 TV business plans and the overall display market outlook. If LG Display keeps producing LCD TV panels, it might benefit LG and Samsung by reducing their dependence on Chinese panel suppliers.
The relationships between the Korean tech giants and Chinese LCD manufacturers are complicated. LG Electronics mainly purchases its LCD panels from BOE, while Samsung Electronics has a higher dependence on CSOT. However, due to patent infringement lawsuits, Samsung’s relationship with BOE has become strained, prompting Samsung to reduce its reliance on BOE.
There’s speculation that LG Display might sell the Guangzhou factory as well as some unused facilities in their Gumi factory in Korea. The rumors about these sales are related to LG Display’s financial situation, which has been suffering from operational losses. Various panel companies, including the Chinese TV company Skyworth, were rumored to be interested in buying the Guangzhou LCD factory. The current stake ownership of the Guangzhou LCD factory is 70% LG Display, 20% Guangzhou Development Zone, and 10% Skyworth.
Some analysts believe that LG Display doesn’t need to rush to sell the Guangzhou factory, especially considering the current downturn in the LCD market. The optimal time to have sold would have been between the second half of 2021 and the first half of 2022 when the LCD market was strong. According to The Elec, some within LG Display oppose the idea of selling the Guangzhou factory. They believe it’s not wise to transfer all LCD technology to China. There are also suggestions that the idle facilities at LG Display’s Gumi factory might be sold to an LG Group affiliate, mainly due to stringent approvals required for factories handling hazardous chemicals.
