LG Display Company is a major Seoul-based South Korean display manufacturer. The company will reportedly stop manufacturing LCD (liquid-crystal display) panels for TV at the end of 2022. However, the reported move came after dropping profitability and severe contest from Chinese competitors. Last week, the company said in a regulatory filing without mentioning the exact date of production postponement.
The company said it was evaluating the termination of production at its LCD TV panel factory in the north of Seoul. LG Display gradually decreased its loss-making LCD TV panel business. The key objective was to stop domestic manufacturing as soon as possible. The company also confirmed that it will decrease manufacturing in China in a significant manner.
LG Display reported an operating loss of $584.9 million (759.3 billion won) for the July-September period. It is important that sales also dropped around 6.3% to 6.77 trillion won in the same period. However, the company recorded a profit of 529.3 billion won in the same period in 2021. The company issued a statement during the earnings call in October 2022.
The Escalated Risks from Growing Economic Collapse
The statement said demand was constantly dropping at a significant level for LCD and OLED (organic light-emitting diode) panels. This situation came after years of pandemic-driven powerful amplification for personal IT devices. The company warned the next year is expected to witness a continuously ambitious business environment.
There are supposedly escalated risks from an emerging economic plunge. However, weakening consumer confidence caused a significant decrease in demand and attempts from clients to decline inventory. The company constantly tried to turn its business around by experiencing growing challenges and expanding its precious customized business.
The Year 2023 will Experience a 40% Boost
LG Display included more resources in LCD panels for IT products and valuable OLED business. Most people considered the company has started a paid-leave program for the factory workforce. An analyst at Daol Investment & Securities, Kim Yang-Jae, said the year 2023 will experience a 40% of increase compared to 2021. He predicted that OLED panels will boost more than 60% of revenue for LG Display in 2023.
Yang-Jae said the operating cost and expenses are expected to decrease in the 4th quarter. It is important that the company’s reorganization began in pivotal. However, it will take a considerable amount of time until it turns to profit again. He was referring to the absence of positive macroeconomic elements that could enhance consumer demand.
LG Display will Announce More Details on December 30
The estimation from Yonhap Infomax said the 4th quarter operating profit of LG Display is expected to be 515.9 billion won. Moreover, Yonhap Infomax is the financial news & information platform of Yonhap News Agency. The display unit of Samsung Electronics started dropping down its LCD TV panel business in mid-2010. Samsung Display completely stopped manufacturing in June 2022.
Meanwhile, LG Display is expected to announce more details on December 30 regarding its planning to end production. On July 28, 2022, an authentic news outlet Business Korea (businesskorea.co.kr) reported a similar story. The outlet said LG Display had planned to seize production of LCD TV panels for the domestic market in 2023.
LG Electronics Earned 5.6 Trillion Won in 2nd Quarter
On July 27, the company announced that it earned 5.6 trillion won in sales in the 2nd quarter. LG Display also experienced around 488.3 billion won in operating loss in 2Q 2022. However, the company’s sales dropped at least 19.5% that the same period in 2021. The earnings moved to a loss for the first time in 2 years since the 2nd quarter of 2020.
However, LG Display also said its product shipments were well behind its actual target amid Chinese city-wide Covid-19 lockdowns. So, the company determined to terminate the production of low-profit LCD panels for the Korean TV market. The production stoppage decision aimed to overcome critical display industry conditions. The company’s Chinese LCD plant will reportedly transform some of its TV panel products into IT devices.