By Kim Yoo-chul
LG Display and Samsung Display, the world's two leading display manufacturers, have decided to halve investment for the construction of advanced display LCD panel plants in China, according to company officials, Tuesday.
The officials said that the decision was made because there are growing concerns about oversupply due to a combination of sluggish global demand for TVs and increased production by Chinese manufacturers.
LG Display, an affiliate of the LG Group, had originally planned to invest a total of $4 billion to build an LCD panel plant with a capacity of 120,000 glass sheets per month in the southern Chinese city of Guangzhou, which is scheduled to go online from the latter half of 2014.
However, it now plans to scale down this investment to $1.8 billion to build a factory that can produce 60,000 sheets per month.
"The investment for our first LCD panel plant will be much lower than initially planned because of an unfavorable market situation. The initial investment to the complex will be around some $1.8 billion," an executive at LG told The Korea Times requesting anonymity, Tuesday.
"But it does not necessarily mean that we are losing interest in the market. We will expand investment again once the market rebounds. China is the country that we shouldn't lose," said the executive, adding that LG hopes to get better tariff-related favors from the Chinese government after the facility goes online next year.
Samsung Display, a display-making affiliate of Samsung, also plans to lower its investment in LCD panel plant in the Chinese city of Suzhou to $1.5 to 1.6 billion.
"We've earlier planned to invest as much as $3 billion to build the facility. But we will miss the investment plan because the global LCD market is seeing an imbalance between supply and demand and continued oversupply," said a Samsung official, asking not to be named.
Samsung had planned to produce 100,000 glass sheets per month from its Suzhou plant after the facility begins operating next year. But it has decided to cut its initial monthly output to around 40,000 sheets.
The company, however, said that it has no plan to completely drop its Chinese LCD-making project because Samsung is embracing China as its "one of the top manufacturing bases."
In December 2010, the two Korean display titans won final approval from a Chinese government body to build cutting-edge LCD panel plants, there.
The supply glut is directly hitting the LCD prices. DisplaySearch, a leading market research firm said, the price for LCD panels sized between 40 inch and 42 inch dropped by 15 percent as of the end of July from two weeks earlier.
"The problem is that the global TV industry is falling down. People shifted towards tablets and smartphones. Samsung and LG won't increase investment until the demand for next-generation TVs such as OLED and UHD ones picks up," said an official at the Korea Display Industry Association (KDIA).
HP Chang, head of LCD research at Taipei-based Witsview, a research company, said, "The best time for investment in LCDs was sometime in 2009, when there was a tremendous growth in China thanks to the government's stimulus package. Samsung and LG may now be more conservative about their investment plans."
LG Display and Samsung Display, the world's two leading display manufacturers, have decided to halve investment for the construction of advanced display LCD panel plants in China, according to company officials, Tuesday.
The officials said that the decision was made because there are growing concerns about oversupply due to a combination of sluggish global demand for TVs and increased production by Chinese manufacturers.
LG Display, an affiliate of the LG Group, had originally planned to invest a total of $4 billion to build an LCD panel plant with a capacity of 120,000 glass sheets per month in the southern Chinese city of Guangzhou, which is scheduled to go online from the latter half of 2014.
However, it now plans to scale down this investment to $1.8 billion to build a factory that can produce 60,000 sheets per month.
"The investment for our first LCD panel plant will be much lower than initially planned because of an unfavorable market situation. The initial investment to the complex will be around some $1.8 billion," an executive at LG told The Korea Times requesting anonymity, Tuesday.
"But it does not necessarily mean that we are losing interest in the market. We will expand investment again once the market rebounds. China is the country that we shouldn't lose," said the executive, adding that LG hopes to get better tariff-related favors from the Chinese government after the facility goes online next year.
Samsung Display, a display-making affiliate of Samsung, also plans to lower its investment in LCD panel plant in the Chinese city of Suzhou to $1.5 to 1.6 billion.
"We've earlier planned to invest as much as $3 billion to build the facility. But we will miss the investment plan because the global LCD market is seeing an imbalance between supply and demand and continued oversupply," said a Samsung official, asking not to be named.
Samsung had planned to produce 100,000 glass sheets per month from its Suzhou plant after the facility begins operating next year. But it has decided to cut its initial monthly output to around 40,000 sheets.
The company, however, said that it has no plan to completely drop its Chinese LCD-making project because Samsung is embracing China as its "one of the top manufacturing bases."
In December 2010, the two Korean display titans won final approval from a Chinese government body to build cutting-edge LCD panel plants, there.
The supply glut is directly hitting the LCD prices. DisplaySearch, a leading market research firm said, the price for LCD panels sized between 40 inch and 42 inch dropped by 15 percent as of the end of July from two weeks earlier.
"The problem is that the global TV industry is falling down. People shifted towards tablets and smartphones. Samsung and LG won't increase investment until the demand for next-generation TVs such as OLED and UHD ones picks up," said an official at the Korea Display Industry Association (KDIA).
HP Chang, head of LCD research at Taipei-based Witsview, a research company, said, "The best time for investment in LCDs was sometime in 2009, when there was a tremendous growth in China thanks to the government's stimulus package. Samsung and LG may now be more conservative about their investment plans."
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