LG Display CEO Kwon Young-soo |
Talks With LG Innotek to Establish JV Fail
By Kim Yoo-chul
Staff Reporter
LG Display, the world's No. 2 supplier of liquid crystal display (LCD) panels, will set up a joint venture with Nasdaq-listed Cree in China.
"LG Display will build a joint venture with the U.S. firm in light-emitting diode (LED) packaging in Nanjing, China," a high-ranking industry source told The Korea Times, Sunday.
"It's a win-win strategy. LG Display is able to cut costs in LED lighting business amid growing demand for the component in notebooks and television sets," the source said, adding the company could avoid possible patent infringement troubles if the plan is realized.
He, however, declined to give financial details such as investment ratios.
Cree is a leader in China's LED sector. In 2007, it bought a Chinese lightning company for business expansion. But Cree now faces a challenge to transform the exposure into new business, as contracts with companies installing lights on new buildings are rising in China.
On a question over the reason of not working with its sister company LG Innotek, the source said the alliance with the local maker won’t create a synergetic effect in LG Display's LED business.
"We had discussed the plan with LG Innotek. But the scenario was finally scrapped due to the pressure of investment and profitability. Also, the module supply by LG Innotek is not steady enough for the time being," the source said.
Not only do LED backlights provide increased battery life for notebooks, they could enable much thinner displays and innovative new thinking about product design.
By riding on such merits, product planners are weighing on possibilities of LED backlight business. Analysts say LED technologies may indeed be the way companies can differentiate their products and offer users additional benefits.
Market research firm Insight Media forecasts large area LED backlights to reach 150 million units in 2012 as the technology shift toward backlights is under way, capitalizing on small- and medium-sized electronics gadgets from the traditional cold cathode fluorescent lamps (CCFL).
Additional Joint Venture
The source adds LG Display has also been in detailed talks with an unnamed Chinese maker to set up an additional LED BLU plant in Nanjing.
"As far as I know, LG Display is reviewing the possibility to create a 50:50 joint venture, there," it said, adding the South Korean company hopes to create synergy by simplifying its notebook and TV module lines.
Triggered by higher expectation of Apple's MacBook Air notebook PC model, major Taiwan-based LCD panel manufacturers such as AU Optronics and Chi Mei Optoelectronics are unexpectedly busy to jointly deliver the needed display to set makers.
Industry insiders say the super-slim laptop is accelerating the transition from CCFL to more efficient and environmental-friendly LED BLUs in such portable devices.
LG's two Taiwanese biggest challengers are set to challenge annual LED-BLU shipment goals of 2 million and 1.5 million, respectively.
"By strengthening partnerships with other BLU suppliers, in addition to a possible plant, LG Display wants to assure the ample supply of LED-BLU panels to international customers and to achieve stronger cost," according to the source.
Earlier, LG Display raised this year's capital expenditure by 1 trillion won or some $1 billion to build a sixth-generation production line that will likely begin operations in the second quarter of next year.
Its CEO, Kwon Young-soo, said the new line, using glass substrates measuring 1,500 millimeters by 1,850 millimeters, will have a monthly capacity of 60,000 units and mainly produce panels for monitors and notebook screens.
The South Korean company has steadily been reducing its TV panel output by switching some of its LCD lines to produce IT-related panels because some of its TV panel customers are suffering from a weaker demand on the industry's oversupply and continued macro-economic woes in the North American market.
yckim@koreatimes.co.kr
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