LG Display sinks deeper into red in Q2, activates Chinese plant to double OLED capacity

[Photo provided by LG Display Co.]

South Korea’s LG Display Co. has commenced mass production of OLED panels at its next-generation Chinese plant to double its OLED capacity in hopes to snap its year-long losing streak and keep Chinese rivals at bay.

The Korean display panel maker on Thursday said it has officially started mass producing 8.5 generation OLED panels at its factory in Guangzhou, China after nearly a year-long setback from the COVID-19 outbreak.

LG Display has been spurring the migration to next-generation OLED panels from its traditional mainstay LCDs to bolster its deteriorating bottom line. According to its earnings guidance released Thursday, the company lost 517 billion won ($430.8 million) in the April-June period, sinking deeper into the red to mark its sixth straight quarter of operating losses. Sales totaled 5.3 trillion won, down 1 percent from a year earlier but up 12 percent versus the previous three months.

LG Display shares remained unchanged from the previous session at 12,750 won in Friday morning trading.

The second-quarter results were worse than expected, due mostly to the delay in Guangzhou plant operation and weak demand and softening prices of LCD panels. LG Display’s LCD business has been suffering major losses in recent year due to fast ascension of Chinese players.

LG Display poured more than 5 trillion won into building the Guangzhou plant, which started construction in 2017. The nine-story facility is built on a 74,000-square-meter site, enough to cover about 10 soccer fields, and commands a total floor area of 427,000 square meters. It would mainly produce OLED panels for large-screen TVs, including 48-inch, 55-inch, 65-inch and 77-inch displays.

“Large OLED panels are an integral part of LG Display’s future growth,” Jeong Ho-young, chief executive of LG Display, told employees at the Guangzhou plant opening ceremony. “We will continue widening the technological gap with rivals and put out differentiated products to strengthen our leadership in the large OLED panel market.”

The new plant would initially produce 60,000 sheets a month. When combined with the output of 70,000 sheets from the company’s plant in Paju, Korea, its total monthly capacity would reach 130,000 sheets. LG Display plans to later bump up Guangzhou’s capacity to up to 90,000 sheets depending on market conditions.

OLED TV panel shipments are projected to exceed 12 million units in 2025 from 4.4 million this year, according to the technology market research firm Omdia. More TV companies are starting to add OLED offerings to their product mix. This year, four TV makers – Vizio from the U.S., Sharp from Japan, and Huawei and Xiaomi from China – joined the OLED bandwagon, raising the number of OLED TV suppliers to 19 worldwide.

While the second quarter saw a slight uptick in TV demand, analysts say this is unlikely to last through the end of the year amid the ongoing pandemic.

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