Posted : 2015-10-19 17:46
Updated : 2015-10-20 01:26

LG accelerates realignment focusing on OLEDs

LG Chairman Koo Bon-moo, left, is briefed about details of LG Chem-developed high-density batteries from executive Kim Myung-hwan during his participation in LG's internal technology fair held at its R&D campus in Yangjae, southern Seoul, in this file photo. / Korea Times file

Group's display unit to handle OLED lighting biz

By Kim Yoo-chul

A stand using LG Chem-developed OLED lighting material is seen in this file photo. / Korea Times file
As part of its ongoing strategic realignment, LG said Monday its display-making affiliate ― LG Display ― will take over the OLED lighting business from LG Chem ― a move to provide more backing for the business.

In a statement, LG Chem said it has received approval from top LG management to sell its OLED lighting unit to LG Display on Dec. 15.

The deal is worth 160 billion won, or some $142 million.

"The latest deal will help LG Chem further strengthen its ability to handle the OLED material business as LG Display has been successful in managing OLED-embedded applications," said C.S. Song, head of LG Chem's public relations office.

Jacquelyn Park, a spokeswoman at LG Display, confirmed that the world's biggest display manufacturer will purchase the OLED lighting business from LG Chem.

"The decision will help LG Group create synergy in the OLED business sector given LG Display's advantage in that segment," Park said.

OLED is short for organic light-emitting diode. OLED applications have emerged as "something next" for global display technologies. This is because it requires no backlighting, and is vivid and more energy-efficient than traditional liquid crystal displays (LCDs).

Strategic focus

The internal deal comes after LG Chairman Koo Bon-moo asked top management of the conglomerate's affiliates to share patents that each of its units have.

A few days ago, the chairman ordered them to review the status of their main businesses, research projects, manufacturing and marketing strategies from a "zero-base," and to change their way of thinking about situations.

"The mood of the meeting was very intense, because the chairman showed his commitment to realign the structure of the affiliates," an LG executive said. "The LG Chem-LG Display deal may awaken other affiliates to adopt new measures for survival."

LG's shift to the OLED business comes after its main affiliates suffered a "systematic decline" in profit. Its key consumer electronics unit ― LG Electronics ― is nowhere to be seen in smartphones, hit by the rise of cheap Chinese mobile vendors. LG's global ranking in smartphones in the second quarter was pushed outside the "top five."

LG Display, another key unit, also expects to post an unimpressive third-quarter performance, mostly due to weak panel prices. The situation is similar to that of its component unit ― LG Innotek ― because Innotek's performance is in-sync with LG Electronics, LG Innotek's top customer.

"It's no surprise to see moves by LG affiliates to realign their businesses," the executive said. "Rather than expand its footstep in volatile business-to-consumer businesses, LG plans to focus more on business-to-business (B2B) businesses. OLED is the kind of thing matching up the emerging internal trends."

Frost and Sullivan, a leading market research firm, said the market for B2B will grow to $6.7 trillion by 2020.

With OLEDs, LG Electronics is increasing investment in car infotainment systems. LG said the OLED lighting business may take off in a few years time. "LG will be quick, faster and adaptive in emerging technologies," said another executive.

LG hopes its multi-billion investment will encourage the adoption of OLED displays, particularly larger screens that can be used not just for TVs but for automobiles and signs.

LG also hopes to become the biggest player in OLED displays for flexible curved screens in smaller devices, including those that are wearable.

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