According to news on November 13, Korean media ETNEWS reported that the direction of LG Display’s liquid crystal display (LCD) factory (fab) in Guangzhou, China has attracted much attention from the industry. This is because the Guangzhou factory is the only remaining LCD factory in the Korean display industry, but as the market changes, the strategic value of LG Display's Guangzhou factory is constantly increasing.
According to industry reports on the 12th, China Skyworth expressed its intention to acquire LGD’s Guangzhou factory and promoted specific negotiations, but ultimately failed. Although the two companies made progress in negotiations and even discussed specific application methods, they had differences on price and could not reach a conclusion.
A person familiar with LG Display’s situation said: “As far as I know, Skyworth Group has always stated that it wants to acquire the Guangzhou factory, but has been unable to reach an agreement. In other words, LG Display is considering gradually withdrawing from negotiations with Skyworth, even if it hands over its shares. Also take over that business because it needs LCD.
Skyworth is one of the three major TV companies in China. In order to strengthen the competitiveness of the TV business, it plans to internalize the core component LCD panel and intends to acquire the Guangzhou LCD factory.
In order to reorganize its business structure, LG Display is reducing the proportion of LCD and turning to organic light-emitting diodes (OLED). The company stopped the production of LCD panels for TVs at its Paju factory (P7) in South Korea at the end of last year, leaving only the LCD factory in Guangzhou, China. Samsung Display also withdrew from the LCD business.Although it is a factory left behind during the process of business downsizing and conversion, the Guangzhou LCD factory is playing an increasingly important role. Sales of high-priced televisions have languished due to the global recession. Samsung Electronics and LG Electronics have launched new generation products such as OLED TVs and micro-LED TVs, but amid sluggish consumption, LCD is still a must.
However, LCDs are mainly supplied by Chinese display companies such as BOE and CSOT. Without LG Display’s LCD factory in Guangzhou, it would have to rely entirely on mainland China.
Although AUO from Taiwan, China, can be used to supply LCDs instead of BOE, LG Display is the one that can meet the requirements in terms of price, performance, and quality.
Industry predictions say that the role of LG Display’s LCD factory in Guangzhou will further expand. It is observed that the operating rate will increase and shipments will also increase, from 9 million pieces this year to 16 million pieces next year.
LG Display said that LCD orders are actually increasing. In the recent third-quarter results conference call, the company stated: "Due to Sino-US trade issues, the supply chain strategy of the customer company (TV set company) has changed, and the demand for supplying panels to our company has indeed increased." But he emphasized Said that the company's business direction has not changed. In other words, although time adjustments can be made, the overall framework of "shrinking LCD and expanding OLED" will not change.
It is reported that although the conversion of the OLED business is being promoted, OLED accounted for 42% of LG Display's third quarter results, which shows that the proportion of LCD is still relatively large. Although it is still unknown when LG Display will fully implement its LCD exit strategy, looking at the overall situation, the Guangzhou LCD factory will need to operate for at least one year.
