LG Display's 8.5G LCD fab in Guangzhou, China is reportedly up for sale and may be acquired by Chinese firm Skyworth, according to industry sources.
About half of the capacity at the LGD plant has been lying idle, but Skyworth would fully resume production there after taking over it, the sources said.
News about LGD looking to sell the Guangzhou plant first emerged in April 2024 as the Korean vendor's finances worsened, the sources said. At the time, LGD was said to be approaching a number of potential buyers, including BOE Technology, TCL group company COST, HKC and Skyworth, but all of them dismissed the speculation, the sources said.
But the latest speculation has identified Skyworth as the buyer of the LGD facility, and the Chinese company will offer the staff of the Guangzhou plant four-year employment contracts, including more than 200 Korean nationals, the sources said.
Skyworth is a stakeholder in the 8.5G LCD plant in Guangzhou, the first panel fab that LGD had ever constructed outside of South Korea, and investment in the plant reached US$4 billion. Construction started in May 2012, and production began there in September 2014. LGD, the Guangzhou Economic and Technological Development Zone administration, and Skyworth hold 70%, 20% and 10% of the stakes of the plant.
The acquisition of the LGD plant would help Skyworth, which has production capacity for system assembly, secure upstream supplies, the sources said. But for Skyworth, which has no experience running LCD lines, it would be a challenge to get the Guangzhou facility back to stable operations and make profits out of them, the sources added.
LGD's 8.5G plant has two production lines, and one of them, with a monthly capacity of processing 100,000 glass substrates, is lying idle, the sources said. The other line is still running with a monthly capacity of 100,000 to 130,000 glass substrates, the sources said, adding the Guangzhou plant's actual output for LCD TV panels will reach only 7-8 million units in 2023.
The Guangzhou plant may resume full production after Skyworth's takeover, and its LCD TV panel output may rise to 15 million units in 2024, the sources said. Such a development would increase LCD TV panel supply and reshape the display panel ecosystem, the sources said.
The sources noted that Skyworth purchases around 15 million LCD TV panels a year, about 6-7 million of which cater for its own-brand TV production and about 7-8 million for contract manufacturing for other vendors. Skyworth is expected to source more panels from the Guangzhou plant after acquiring it, and reduce the purchases from other panel makers. Skyworth currently purchases LCD TV panels mainly from BOE, HKC and Innolux, the sources said.
LCD TV panel prices have seen increase of more than 30% for several size segments over the past several months, thanks to strict control of output by the suppliers, the sources said. The rising panel prices have been heaping pressure on system makers, but utilization rates at panel makers have also been rising amid an uptick in seasonal demand, the sources said, adding that average utilization rates have reached more than 80% in the third quarter of 2023.
Some 70-80% of the world's LCD TV panels are made in China, with BOE, CSOT and HKC being the major suppliers. Their reduced output this year has managed to shore up LCD TV panel prices.
As the seasonal demand is coming to an end, LCD panel utilization rates may drop in the fourth quarter, the sources said. And as panel makers are likely to see improvements to their financial health in the fourth quarter, they will more likely agree to customers' demand for price cuts, the sources said, adding the LCD TV price increase trend may end in the fourth quarter.
Article translated by Rodney Chan
