LG Display Co.’s new stretchable display is shown in an image provided by the company on Nov. 8. (LG Display Co.)
South Korea’s major display maker LG Display is expected to stop producing liquid crystal TV panels by the end of this year due to falling profits and stiff competition from Chinese rivals, industry sources said on Monday.
The company said in a legal filing last week that it was reviewing whether it had not specified the exact date of the shutdown at its LCD TV panel plant in Paju, north of Seoul.
The panel maker is scaling back its loss-making LCD TV panel business with the aim of winding down domestic production as soon as possible. It was also announced that production in China would be reduced in stages.
In the July-September period, the company posted an operating loss of 759.3 billion won, or $584.9 million, compared with an operating profit of 529.3 billion won a year ago. Sales fell 6.3 percent to 6.77 trillion won in the same period.
Demand for LCDs and premium organic light-emitting diode panels is falling at an “unprecedented level,” the company said during its October earnings report after strong growth in personal IT devices due to the pandemic.
It warned that the tough business environment will continue next year as risks from an economic downturn increase, weak consumer confidence dampens demand and customers attempt to reduce inventories.
Faced with mounting challenges, the company is trying to turn around the business by deploying more resources into LCD panels for IT products and the high-margin OLED business, as well as expanding its high-value custom manufacturing business.
It is also said that the program of paid leave for factory workers is being discussed.
Daol Investment & Securities analyst Kim Yang Jae predicts that OLED panels will account for more than 60 percent of LG Display’s revenue by 2023, up from less than 40 percent in 2021.
“Operating losses are expected to narrow in the fourth quarter as the company’s restructuring has begun, but it will take time to return to profitability,” he said, adding that there were no positive macroeconomic factors to boost consumer demand.
LG Display’s fourth-quarter operating profit is expected to be around 515.9 billion won, according to estimates by Yonhap Infomax, the financial news and information arm of Yonhap news agency.
Samsung Display, the display unit of Samsung Electronics, has been reducing production of LCD TV panels since mid-2010, ending production altogether in June.
LG Display said it will release more details on the end of production on December 30. (Yonhap)