LG Display Reports Q2 Loss Despite Accelerating OLED TV Sales
LG’s flat-panel display manufacturing unit LG Display Co Ltd might have big plans for expanding its OLED panel production capabilities in coming months, but it continues to lose money on its on-going operations.
South Korean-based LG Display last week reported its second-consecutive quarterly loss as revenue tumbled due to falling panel prices and weaker demand from LCD television and mobile device makers.
LG Display, which is a leading display panel resource for Apple, reported an operating loss of 228 billion won ($202.1 million) in the quarter as revenue fell 15% to 5.6 trillion won, from the same period in 2017.
LG faces slowing demand for flat-panel televisions and other LED LCD-based products due to a glut of panel production coming from expanded Chinese production. Manufacturers in that country are growing construction of 10.5 Gen plants, which make large sheets of mother glass from which smaller television screens are cut, forcing panel prices lower and compressing profit margins.
LG Display said the LED-LCD over-supply situation is likely to continue.
Analysts have pointed out that although large-screen OLED panels are a major growth sector for the company, behind accelerating sales of panels for large-screen 4K OLED televisions, that activity is on the rise in part because LG Electronics has purchased panels at a loss to its sister company LG Display in an effort to keep prices on finished goods competitive with large-screen QLED and other advanced 4K Ultra HD LED-LCD television technologies.
Earlier this month, LG reported demand for large format OLED panels was accelerating both from LG Electronics and from other television brands who must purchase OLED panels from LG Display.
So far, LG Display remains the sole source for the large-format OLED panel technology in the world. The company has been investing heavily in boosting OLED panel production and advancing next-generation OLED technology as well as OLED manufacturing processes for large OLED TV screens.
China recently approved an LG joint venture to establish a new OLED factory in that country, which is the No. 1 market for large-screen 4K Ultra HDTVs.
Analysts have reported that the increased OLED panel production investments should boost LG Display’s earnings in the black after this year.
Nevertheless, LCD panels make up an estimated 90 percent of LG’s world wide sales and that technology is now seeing rapidly escalating competition from new Chinese panel fabs.
According to a report on the Nikkei Asian Review citing Korean Government data, the price of a 50-inch LCD panel dropped 38% in May, compared with the same month last year.
By Greg Tarr
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