Workers work at LG’s plasma panel production line. No flourescent light can be used in the process so the alternative lighting makes the factory all yellow. LG Electronics is gauging the right time to scrap its plasma business, possibly in early 2010 at the earliest, analysts say. |
By Kim Yoo-chul
Staff Reporter
At least in its plasma television business, LG Electronics seems to be facing a dilemma ― whether to pulling out or continue.
Executives at the firm say the answer is not simple as the over 50-inch plasma market is still competitive in terms of prices.
It seems highly unlikely for LG to withdraw from the plasma market within the next few years. But one clear sign is that the overall outlook for the market is "not positive."
"Considering profitability, the plasma TV business won't be a cash-cow. Restructuring it is one possible option, though the timing is not ripe," an LG executive told The Korea Times, Friday, asking not to be identified.
In the wake of global turmoil, plasma technology is on the wane as consumers seek LCD TVs as their flat panel of choice, attracted by lower prices.
Flat-screen companies are moving on to the next innovation, the next-generation organic light-emitting diodes (OLED).
Plasma screen has strength in its wide-viewing angle. But LCD TVs use less electricity than PDP TVs and are better in bright rooms. They are also more affordable in smaller sizes.
"LG hopes to focus on the LCD TV business even in the over 50-inch category as the TV price range of PDPs and LCDs have narrowed, significantly. But it's up for LG Display to ramp up its eighth-generation LCD lines," another LG official said.
LG Electronics' flat-screen affiliate LG Display is set to ramp up its eighth-generation lines within the month with a monthly target capacity of 83,000 glass sheets, according to an LG Display spokesman.
The eighth-generation LCD line is optimized to produce panels over 50-inches. After LG Display reaching economies of a scale in its latest lines, the market for PDPs over 50-inches could be negligible.
"The demand for LCD TVs in larger sizes is showing signs of a turnaround. At the earliest, LG will slow down its plasma TV business in early 2010," the executive added.
In a recent press conference, LG Electronics CEO Nam Yong said his company has been considering restructuring its plasma business as the sector was "at a critical phase."
Nam emphasized LG is not planning to inject any additional capital to strengthen the plasma business and added the company will make a crucial decision when the sector falls into the red.
In 2008, LG suffered a decline of 1.5 percent in sales of its plasma modules from the previous year due to a sharp drop in the prices of TVs and a slowdown in sales of PDP modules.
Japan's Panasonic, the world's biggest producer of plasma TVs, will reduce production to about a third of its maximum output this year.
According to research firms, Panasonic captured 39.1 percent of global share in terms of sales, last year, followed by Samsung Electronics and LG Electronics with 29.5 percent and 22.7 percent, respectively.
yckim@koreatimes.co.kr
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