The sale of LGD Guangzhou LCD production line has entered administrative approval

Showing world news, according to South Korean media Polinews, LG Display has entered the administrative approval process for selling its Guangzhou Liquid Crystal Display (LCD) factory.

According to industry disclosure on the 9th, LG Display and the Ministry of Industry, Trade and Resources recently began to negotiate review procedures related to the sale of Guangzhou LCD factories.

The application intention to allow the sale of China factories was conveyed to the South Korean government because the sale is mature. The reason why LG Display, which sells China factories, requires government approval is that the technology applicable to the LCD factory is designated as the national core technology.

According to South Korea's "Law on Preventing and Protecting the Outflow of Industrial Technology", matters related to overseas acquisitions and mergers of national core technology exporting and owning institutions must be reviewed by the Industrial Technology Protection Committee under the Ministry of Industry, Trade and Resources.

Experts predict that LCD is not the main technology in South Korea. In order to escape the catch-up of China, investment must be made in a new generation of display technology, so there will be not much disagreement during this review process.

LG Display's factory in Guangzhou, China is LG Display's first overseas production base and began operation in 2014. This factory has invested approximately 4 trillion won and currently has a total production capacity of 300,000 substrates through two production lines. It also has wide viewing angle (IPS) related technology suitable for high-end LCDs.

However, due to competition from China companies, the profitability of LCD panels has deteriorated and they are facing a survival dilemma. LG Display has been reducing its LCD panel business for TVs while stopping production at the P7 plant in Paju, South Korea, which produces LCD TV panels at the end of 2022.

At the end of 2022, LG Display ended domestic production of low-yield LCD TV panels in South Korea, reduced the proportion of its LCD business, and promoted business restructuring centered on OLED.

Factory sales negotiations include BOE, the largest display company in China, TCL China Star (CSOT), a display subsidiary of home appliance company TCL, and home appliance company Skyworth. It is reported that they and 4 to 5 companies including Financial Investors (FI) submitted letters of intent (LOI) to LG Display.

According to industry sources, there is a high possibility that CSOT will acquire the Guangzhou LCD factory. Previously, CSOT acquired Samsung Display's 8.5-generation LCD factory in Suzhou in 2021.

Relevant industry sources emphasized that China has recently begun to produce OLED panels in small and medium-sized fields and invested huge investment. If you don't want to catch up with OLED after LCD, you should accelerate structural changes centered on the new generation of panels. quot;

It is worth mentioning that the main customer Apple's tablets use OLED panels, which is considered to be an expected factor in improving LG Display's performance this year. On May 8, Apple announced the new iPad again after 18 months.

According to market research firm Omdia, LG Display's annual share in the small and medium-sized OLED market such as tablets will be 12.9% in 2021, reaching double digits for the first time. It will be 13.6% in 2022 and 16.6% in 2023, which will continue to grow every year. Especially from a quarterly perspective, the fourth quarter of 2023 exceeded 20% for the first time, reaching 22.1%, and the business is on the right track.

In terms of vehicle-mounted OLEDs, LG Display has set a record number one in sales in the market share of vehicle-mounted displays above 10 inches for five consecutive years from 2018 to 2023.

The long-term depressed TV market is also expected to wake up from its long sleep. Omdia recently raised its forecast that shipments of large displays will increase by 7.4% year-on-year this year, and area will increase by 11.1%.

Shipments of OLED panels for displays will also increase from 830,000 units last year to 1.84 million units this year, an increase of approximately 120%. Omdia predicts that from this year to 2027, the average annual growth rate will exceed 21%, and the scale will expand to 3.3 million units.