LG Display to Invest $1.75 Billion in OLED Display Production
July 26 2016 - 09:50PM
Dow Jones News
SEOUL—LG Display Co., one of the world's biggest makers of
display panels used in smartphones and televisions, said Wednesday
it would invest 1.99 trillion Korean won ($1.75 billion) to produce
flexible organic light-emitting diode, or OLED, displays for use in
mobile phones.
The investment in a new production line will give LG Display, a
supplier of mobile phone displays to Apple Inc., the ability to
ramp up mass production in the second half of 2018, as technology
companies increasingly turn to OLED displays for the screens in
smartphones, tablets and smartwatches.
Yet the announcement came amid mounting evidence of struggles at
LG Display, which also announced Wednesday that it recorded a net
loss of 84 billion won in the April-June period, versus a net
profit of 363 billion won in the same period a year earlier.
Sales also fell 13% from a year earlier, to 5.86 trillion won,
as LG Display cited a fall in panel prices and an aggressive LCD
production rampup by Chinese rivals.
Korean rival Samsung Electronics Co. has long furnished its
flagship smartphones with OLED displays, which are more difficult
to produce but which are prized for their sharper colors and for
their thinness, allowing the screen to bleed to the edge of the
handset and to be curved.
Apple, on the other hand, has stuck to liquid crystal display
panels for its iPhone screens, and is unlikely to make any major
changes this year. But analysts widely predict Apple could make the
leap to OLED displays for its iPhone release next year.
Apple didn't immediately respond to a request for comment.
"Apple's upcoming adoption of OLED displays will be a milestone
for OLED in the display industry," said David Hsieh, a senior
director at IHS Markit. The research firm said in a report Tuesday
that it expects OLED displays to replace LCD as the dominant
smartphone display technology by 2020, when it will account for
about 36% of all smartphones shipped.
Most analysts believe Samsung's unlisted display unit, Samsung
Display Co., has already won the contract to supply those OLED
screens for Apple's iPhones next year, though Samsung has declined
to comment.
LG Display has announced other investments in smaller-size OLED
panels in recent months, though it has been slower to do so than
rival Samsung, focusing its energies instead on the larger-size
OLED panels used in televisions and digital signage.
Last year in July, LG Display announced a 1.05 trillion won
investment in a production line, and in November it added a 1.84
trillion won investment in an OLED plant that will produce both
large-size television panels and smaller flexible displays.
But analysts still argue that LG Display has some catching up to
do in smaller-size OLED panels.
In February last year, Samsung said it would invest 4 trillion
won over the next years to upgrade and expand its mobile OLED
display facility, adding to its already sizable lead in mobile
OLEDs.
TrendForce, a Taipei-based research firm, said in a report
earlier this month that LG Display lagged behind Samsung in making
small-size OLED panels, and "will try to catch up…by accelerating
their timetables for the development and mass production of [OLED]
panels."
Han Sang-beom, LG Display's CEO, acknowledged the market
dynamics in a statement, saying "a paradigm shift to OLED
represents both a challenge and an opportunity for the display
industry." The statement also cited forecasts that show flexible
OLED shipments will jump sevenfold in the next four years.
Write to Jonathan Cheng at jonathan.cheng@wsj.com
(END) Dow Jones Newswires
July 26, 2016 21:35 ET (01:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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