LG Display (LGD) has sold its LCD plant in Guangzhou, China for approximately US$1.54 billion, a strategic move critical to the company's pivot towards OLED production. This sale, spearheaded by company president Jeong Chul-dong, has sparked industry speculation on whether LGD will now accelerate its investment in the competitive OLED sector.
New CEO charts new course
Jeong assumed the role of president of LGD in November 2023, following the company's senior management restructuring for 2024. According to South Korean media outlet Chosun Biz, Jeong managed to complete the liquidation of LGD's LCD business, a division the company had operated for over a decade, in less than a year after taking office.
While former LGD president Jeong Ho-young focused on cost-cutting and layoffs, the incumbent CEO has prioritized improving the company's overall business structure. Previously, as president of LG Innotek, Jeong demonstrated his strategic acumen by overseeing the sale of its LED business and implementing cost-cutting measures, ultimately transforming the company into Apple's largest supplier of camera modules.
Recently, LGD announced that its board approved an agreement with TCL CSOT, a subsidiary of China's TCL Group, to sell its large-sized LCD panel and module factory in Guangzhou. The deal is valued at CNY10.8 billion (approx. US$1.54 billion), with the sale expected to be completed by March 31, 2025.
Navigating a challenging transition
Since 2016, Chinese companies have aggressively invested in LCD production, driving prices down. In response, South Korean display manufacturers, including LGD, began phasing out their LCD businesses. However, transitioning from profitable LCD ventures to the less mature OLED market has presented significant challenges.
While Samsung Display exited the LCD business relatively swiftly, the Guangzhou LCD plant remained a problematic asset for LGD.
The sale process was not without hurdles. LGD engaged in tough price negotiations with TCL CSOT during the final stages, but ultimately secured the desired price for the plant.
Despite the sale, LGD now faces new challenges. In addition to the imminent transition to OLED production and the need to improve profitability in that sector, the firm must also contend with continual stiff competition from Samsung Display (SDC), particularly in the small-sized OLED segment.
Meanwhile, to capitalize on opportunities in the IT OLED sector, SDC and BOE Technology have already invested in and are constructing 8.6-generation OLED factories. However, LGD has yet to announce any investments in this area.
Although LGD will continue to restructure its business and focus on OLED development, South Korean media noted that LGD does not plan to use the proceeds from the sale of its Guangzhou LCD plant to invest in an 8.6-generation OLED factory.
LGD experienced consecutive losses from the second quarter of 2022 through the third quarter of 2023. Although the company briefly returned to profitability in the fourth quarter of 2023, driven by iPhone demand, it recorded another operating loss in the first half of 2024 and is now working to reduce the scale of its losses.
Article translated by Jerry Chen
