LG to build biggest LCD plant in China
LG Display to build world’s biggest LCD plant in China
By Kim Yoo-chul
It’s been a dismal time for LG Display as sluggish demand and business uncertainties have combined to see the Korean company suffer losses for more than a year.
But LG Group’s display panel-making affiliate believes that the worst has passed and it will see a turnaround this year on the back of increased demand for high-end consumer electronics.
With the upbeat outlook, the company held a groundbreaking ceremony Tuesday to start construction of the world’s largest LCD plant in Guangzhou, southern China, where it will use cutting-edge eighth-generation technology.
In a statement, the company said it is aiming to operate the plant from the latter half of 2014. Officials said there was a possibility that the company’s first Chinese plant will produce credit card-thin organic light-emitting diode (OLED) displays for use in televisions, however, spokesman Gary Sohn declined to confirm this.
Building comes more than a year after LG obtained final approval from both the Korean and Chinese governments in December 2010; it had to delay the groundbreaking due to the industry’s prolonged slump.
Just days ago, rival Samsung Display started building an LCD plant in the eastern Chinese city of Suzhou with an investment of $3 billion.
The LG plant is a joint investment project. LG has invested a total of $4 billion, accounting for 70 percent of the total, followed by one of its Chinese partners, Skyworth Digital Holdings with 20 percent and the Guangzhou regional government, 10 percent.
``As part of our corporate social responsibility (CSR) initiatives, LG will bring Korea-based parts suppliers to Guangzhou in an attempt to build the biggest display-making cluster,’’ said Sohn, adding the company initially plans to produce film-patterned three-dimensional displays for use in 3D televisions.
Despite huge operating losses of 1.5 trillion won over the last six quarters, LG made the investment to gain the upper hand in the world’s largest LCD TV market.
Market research firm DisplaySearch said over 44 million LCD TVs were sold in China, last year, and the market will increase to 57 million in 2014.
Currently, Chinese companies are capable of building and running less-advanced sixth-generation plants at best. There is no firm plan for seventh-generation or larger glass-substrate production in China this year, keeping Chinese assemblers dependent on South Korea for large panels.
An eighth-generation plant uses glass substrates of 2.2 by 2.5 meters. Such substrates are used for 27-, 32-, 47-, 55-, 65- and 95-inch high-definition panels. Existing Chinese panels are better suited to less-profitable PC monitors.
``The industry’s downturn affected panel makers in Taiwan more acutely than in Korea,’’ said Park Young-joo, an analyst at Woori Investment and Securities.
But some industry experts expect LG Display and Samsung to eventually shift their LCD lines in China to ultra-thin OLED screens ― LCDs are being phased out as the market is already overcrowded.
OLEDs are emerging as the replacement for LCDs as they are is more effective in terms of power and brightness. The world’s top two TV makers, Samsung and LG, have released mass-produced 55-inch OLED TV sets.
``It makes sense that Samsung and LG will produce OLED screens in China after a few years,’’ said Park.
LG said its Guangzhou plant will help save costs in logistics and tariffs in exporting products outside China, boosting the company’s overall competiveness.
``Details about the investment and our future plans will be forthcoming, possibly in the late second quarter of this year. We won’t massively increase output as LG doesn’t want to deteriorate the market,’’ said Sohn.
LG Display supplies LCD panels to major technology firms including Dell, Hewlett-Packard, Nokia and Apple.