LCD, which has consistently made big profits for LG Display since 2012, is now facing big losses in the face of low prices by the bank of England and has closed three LCD production lines since last year.
This spring, LGD chief executive han xiang fan even smashed his LCD screen in front of 1,000 employees, showing the company's determination to move away from its former profit powerhouse and develop OLED displays in the future.
Misjudging the situation, LGD goes down
Less than a year ago, LGD was reported to be still dominant in the LCD segment, generating significant revenue for the company.But a sharp drop in LCD prices earlier this year caused the company to face huge losses this year, and in July it even announced a $2.7 billion cut in planned spending over the next three years.
Lee won-sik, an analyst at Shinyoung, believes there has been a serious misjudgment in LGD's LCD business, resulting in a failure to pull out of the business in time for China's rapid rise.
LGD employees, who did not want to be identified, said the company knew about the price cut last year, but did not anticipate it would come quickly or quickly.
Before Beijing's rise, LGD accounted for more than a third of the LCD market.But in January 2017, Beijing Orient replaced LGD (21.6 percent) as the largest supplier of LCD screens over 9 inches, with a 22.3 percent market share.
In addition, early this year, all kinds of LCD screen prices dropped significantly;In August, prices of 50-inch LCD TV panels fell 32% from a year earlier, according to IHS Markit.As a result, LGD got into trouble and was forced to slash the capacity of LCD screens, close three production lines and abandon plans for new production lines.The move comes after samsung, LGD's biggest rival, gradually shut down its LCD production line as early as 2010.
OLED could be the sole savior of LGD
In the future, LGD plans to invest $17.6 billion in OLED over three years, and expects 40 percent of OLED revenue in 2020.
In recent days, it has been reported that LGD has made a large-scale investment in Vietnam. In the first half of the year, LGD invested as much as 212.6 billion won (1.3 billion yuan) in Vietnam's local production plant, Vietnam Haiphong.Mainly used to increase POLED (Plastic OLED) capacity.
According to the analysis, LGD believes that Vietnam is a production base that can replace China. Although LGD has centralized investment in China, due to the rise of labor costs and other costs in China, LGD will turn its attention to Vietnam with lower production costs in the future.
The report said LGD invested so heavily in the Vietnam Haiphong plant, mainly to increase POLED capacity.POLED produced by the plant is mainly used for small and medium-sized products such as mobile phones.
Nevertheless, LGD will continue to face competition from Beijing Oriental and samsung in OLED field.
However, LGD said it is currently the only manufacturer of large-size OLED displays with "" unparalleled technical expertise" "in the OLED field;LGD expects the OLED division to make a profit in the third quarter of this year and expects LCD screen prices to stabilize in the future, and the company is prepared to use the related revenue to develop OLED technology.
LGD said that since OLED is the only way for companies to cope with the crisis, there is no alternative but to tighten their belts and continue to invest in OLED development.