LG Display to Sell Guangzhou’s LCD Factory to China’s CSOT

LG Display LCD factory in Guangzhou, China. [Courtesy of LG Display Co.]

LG Display Co. will sell its liquid crystal display (LCD) factory in Guangzhou to TCL China Star Optoelectronics Technology Co. (CSOT) as it shifts its business focus to organic light-emitting diode (OLED) technology.

The display panel maker said Thursday that LG Display selected CSOT as the preferred bidder for the sale of shares in its Guangzhou LCD manufacturing subsidiary and will conduct exclusive negotiations.

CSOT is the display subsidiary of Chinese consumer electronics company TCL Technology Group Corp. TCL uses CSOT to vertically integrate its display business and ensure a stable supply of LCD panels, and CSOT also acquired Samsung Display‘s Suzhou 8.5-generation LCD plant in 2021.

LG Display had previously pushed for the sale of the Guangzhou factory to exit the LCD business and focus on OLED. Around 3 to 5 other Chinese companies, including BOE Technology Group Co., have shown interest in the Guangzhou factory alongside CSOT. The industry predicts that the sale price of the Guangzhou factory could reach up to 2 trillion won ($1.5 billion) and if the sale proceeds smoothly, it is expected to be completed in the third quarter of 2024.

LG Display reportedly selected CSOT as the preferred bidder after evaluating the purchase price, support plans for the operation of the Guangzhou factory and other important conditions via a main bid. Once the sale of the Guangzhou factory is completed, there will be no Korean electronics companies producing LCD TV panels.

The LCD market had been primarily led by Korean panel manufacturers, which took the top positions in the global market from the mid-2000s to 2016. But the situation changed after the manufacturers hit a peak in 2017 as they faced competition from government-backed Chinese panel makers.

LG Display also faced increasing pressure from Chinese display companies’ aggressive low-price strategy, resulting in losses for seven consecutive quarters through the fourth quarter of 2023 due to its high dependence on the LCD business. The company therefore decided to exit the LCD business and focus on the high value-added OLED sector.

The display industry expects the transition to OLED to accelerate as Chinese companies continue to expand their dominance in the LCD market. Chinese companies are already considering entering the OLED business as competition in the low-cost LCD market continues. If LCD prices rise, the price gap with OLED panels will narrow, potentially allowing Korean companies to regain price competitiveness.