LG Display’s China OLED Fab Ramps Up As Profits Drop
LG Display formally celebrated Thursday the start of full mass production of OLED TV panels from its 8.5 Gen OLED panel fab in Guangzhou, China, but the festivities came as its quarterly reports showed a continued net loss.
The Guangzhou facility, which has been slowly ramping up to full output, is an 8.5th generation (produces mother glass measuring 7.21 x 8.2 feet) OLED panel production plant in Guangzhou, China. This is only the world’s second large-format OLED panel production facility, beyond LG’s original factory for WRGB OLED panels based in Paju, South Korea.
LG Display said the fab is currently producing 70,000 sheets per month, and “based on these two production bases, the company is fully prepared to further accelerate the trend of large-size OLED displays.”
The 8.5 Gen. OLED plant celebration came as LG Display posted an operating loss of $430 million (517 billion won) in the second quarter. That was down for a 362 billion won loss in the previous quarter, and was attributed to a price drop for LCDs and readjustment of production schedules due to the global pandemic. Net loss stood at $419 million for the quarter.
Nevertheless, the company said it saw panel shipment increases for mobile devices and TVs due to the COVID-19 pandemic, that helped account for a 12% increase in sales to 5.3 trillion won. LCD panels for IT products such as notebooks, tablets and monitors accounted for 52% of its sales, according to company reporting. Those for handsets accounted for 25% and TVs 23%.
Meanwhile, LG Display said it plans to use the additional output from the Guangzhou OLED panel facility “to supply OLED displays to global customers in a timely manner.”
Operators plan to use the facility to “actively adopt the latest technology, diversify product categories, and strengthen collaboration with other industries to provide differentiated and premium values unique to OLED.”
“Large-size OLED business is the essential growth engine of LG Display for the future,” stated James Hoyoung Jeong, CEO of LG Display. “As the new Guangzhou OLED panel plant begins mass-production, combined with our Paju OLED plant, we are able to accelerate the growth of the large-size OLED business in terms of both quality and quantity. This will enable more rapid adoption of OLED displays in the market.”
The company assures the new facility will help it further strengthen its OLED leadership position by developing differentiated products and “widening the technological gap between the company and the other following players in the industry.”
LG Display’s Guangzhou fab celebration follows reports that its chief rival Samsung Display is advancing on the production of next-generation displays based on hybrid quantum dot technologies including QD-OLED displays and Quantum Nano Emitting Diode (QNED) displays.
LG said the outbreak of COVID-19 occurred in the process of preparing for mass-production at the Guangzhou OLED panel plant, which affected its operation at a time of increased demand volatility.
“These factors delayed the full-scale mass production schedule and LG Display undertook all possible efforts to solve these issues, including dispatching 900 core engineers by chartered flights to Guangzhou since March of this year.”
LG Display’s Guangzhou OLED panel plant will focus on manufacturing large-size high-resolution OLED products including 48-inch, 55-inch, 65-inch, and 77-inch panels, as it boasts high efficiency and productivity, which makes it more advantageous for the production of extra-large and high value-added OLED panels. The production capacity will be expanded to 90,000 sheets per month down the road from the current capacity of 60,000 sheets depending on market demand.
LG Display said it is able to produce over 10 million OLED TV panels annually (based on a 55-inch panel) by maximizing the production capacity of its Paju and Guangzhou plants. Profitability is expected to improve as the company secures an economy of scale with the production capacity increase, the company said.
With a total of 19 TV brands now manufacturing OLED TVs now and the number on a constant increase, LG Display will be able to more promptly respond to this rising demand in the market.
LG Display quoted Omdia research estimates that about 4.4 million OLED TV units will be sold this year, and continual growth will see over 12 million units sold in 2025.
Last week, UBI Research announced it had reduced its forecast for LG Display’s large-sized OLED panel shipments this year by over 25% to 3.6 million units due to the impact of the COVID-19 pandemic. That was a 1.3 million unit reduction from the research firm’s initial forecast of 4.9 million units and was based on the assumption that the global TV market would recover and the Guangzhou fab would be operating at an originally expected normal level.
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By Greg Tarr
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