LG Display to push industrial recovery
By Kim Yoo-chul
Analysts said Thursday that LG Display, the world’s largest LCD panel maker, is expected have a better year thanks to a partnership with Apple.
Last year wasn’t a good one for LG Display due to a steep decline in prices caused by the debt crisis in Europe and poor demand for televisions in key markets.
The LCD business is cyclical and volatile to economic situations. Usually, manufacturers report their earnings peak in the latter half of the year as set makers order more panels ahead of the holiday season.
But LG Display didn’t see the cyclical factor last year. It has had operating losses for more than a year, but it is doing better than overseas rivals Sharp of Japan and Chi Mei Innolux of Taiwan.
In 2011, LG reported an operating loss of 924.3 billion won, while revenue declined by 4.8 percent to 24.29 trillion won, the company said in a filing to the Korea Exchange (KRX).
``This year will be different. LG Display will increase output of premium displays such as film-patterned retarder ones for 3D applications and we want to release cost-effective OLED screens earlier than expected,’’ said the firm’s chief financial officer Jeong Ho-young.
The situation is changing to favor the display-maker. LG Electronics’ smartphone business has improved since late last year, meaning more panel orders for LG Display. LG Electronics owns a 37.9 percent stake of LG Display.
LG Electronics is narrowing the gap with rival Samsung in the race for 3D televisions in key markets as its film-patterned 3D technology is receiving more attention from Japanese TV majors including Panasonic and Sony.
For the fourth quarter last year, LG Electronics was the top 3D TV seller in five countries including Brazil and Mexico, said company spokesman Yoon Won-il.
``This is really impressive. LG Display plans to increase its global share of film-based 3D panels for TVs to 50 percent,’’ said Jeong, adding more calls from top-tier TV makers and technology companies for its 3D panels are helping strengthen the company’s bottom line.
It is also betting heavily on next-generation organic light-emitting diode (OLED) flat-screens.
``LG Display is still reviewing whether should we convert existing LCD lines to OLED or make a fresh investment. But we will decide soon because OLED is the next big thing that we cannot lose out on,’’ said Jeong.
OLED is brighter and thinner than existing LCDs. All TV majors are drastically shifting their focus to OLED products as they are regarded as the next cash cow.
The current technology can be split into two camps _ RGB OLED and White OLED. RGB OLED adopted by Samsung Electronics is similar to how plasma TVs work, with separate red, green, and blue sub-pixels.
White OLED is different. Red, green, and blue OLED materials are sandwiched together. When powered, these create a white light. This passes through a color filter, to create the red, green, and blue sub-pixels.
``White OLED has more benefits than RGB-based OLED. We are in the long-life testing phase and we believe our White OLED will perform well,’’ said the head of LG Display’s public relations office Sohn Young-june.
Technology is one factor, while customers are another. In terms of that, the firm looks stable as its partnership with Apple is strengthening.
It will supply its Retina displays to Apple’s i-branded products over the next few years as it has satisfied the American firm’s tough requirements and conditions.
Meanwhile, Samsung Electronics Vice Chairman Kwon Oh-hyun told The Korea Times that his company isn't the sole supplier for Apple’s new iPad, denying a foreign media report that LG Display was out for the panels for the just-released product.
Sohn declined to talk more about Apple. But industry sources here say the company will use LG screens over the next five years.
The American firm still has the best tablet on the market, and it’s made some massive upgrades with a new screen and a faster 4G wireless connection.
``The retina display represents the centerpiece of the new iPad and is the most obvious enhancement in features compared to previous-generation models,’’ says Andrew Rassweiler, senior principal analyst for teardown services at IHS iSuppli.
Initially, Apple was hoping to source the display from Sharp and LG Display as well as Samsung. LG, needing to solve difficulties with its manufacturing process, appears to have left Samsung as the sole supplier, at least for the time being, according to analysts.
``We are expecting the demand for tablets will rise between 70 percent and 80 percent this year from the previous one. We have no doubt that LG Display will maintain the current lead as the authoritative flat-screen supplier for tablets,’’ said Oh Kwang-yeol, a senior executive for LG Display.
The company is promoting in-plane switching LCD technology. This has advantages in viewing quality and wide angles, causing the late Apple CEO Steve Jobs to give it rare praise.
Officials say LG’s high-end screens called Shuriken are also seeing more customer demand.
``LG Display will see a turnaround in terms of profit from the second quarter of this year. It will be better than its rivals in terms of operating losses in the first quarter,’’ said Park Hyun from TongYang Investment