LG Display to invest $1.75 bln for OLED screens

Jul 27, 2016

Companies are increasingly turning to OLED displays for smartphones, tables and smartwatches

A man walks out of the headquarters of LG Display in Seoul on Oct. 20, 2011. PHOTO: REUTERS

SEOUL— LG Display Co., one of the world’s biggest makers of display panels used in smartphones and televisions, said Wednesday it would invest 1.99 trillion Korean won ($1.75 billion) to produce flexible organic light-emitting diode, or OLED, displays for use in mobile phones.

The investment in a new production line will give LG Display, a supplier of mobile phone displays to Apple Inc., the ability to ramp up mass production in the second half of 2018, as technology companies increasingly turn to OLED displays for the screens in smartphones, tablets and smartwatches.

Yet the announcement came amid mounting evidence of struggles at LG Display, which also announced Wednesday that it recorded a net loss of 84 billion won in the April-June period, versus a net profit of 363 billion won in the same period a year earlier.

Sales also fell 13% from a year earlier, to 5.86 trillion won, as LG Display cited a fall in panel prices and an aggressive LCD production rampup by Chinese rivals.

Korean rival Samsung Electronics Co. has long furnished its flagship smartphones with OLED displays, which are more difficult to produce but which are prized for their sharper colors and for their thinness, allowing the screen to bleed to the edge of the handset and to be curved.

Apple, on the other hand, has stuck to liquid crystal display panels for its iPhone screens, and is unlikely to make any major changes this year. But analysts widely predict Apple could make the leap to OLED displays for its iPhone release next year.

Apple didn’t immediately respond to a request for comment.

“Apple’s upcoming adoption of OLED displays will be a milestone for OLED in the display industry,” said David Hsieh, a senior director at IHS Markit. The research firm said in a report Tuesday that it expects OLED displays to replace LCD as the dominant smartphone display technology by 2020, when it will account for about 36% of all smartphones shipped.

Most analysts believe Samsung’s unlisted display unit, Samsung Display Co., has already won the contract to supply those OLED screens for Apple’s iPhones next year, though Samsung has declined to comment.

LG Display has announced other investments in smaller-size OLED panels in recent months, though it has been slower to do so than rival Samsung, focusing its energies instead on the larger-size OLED panels used in televisions and digital signage.

Last year in July, LG Display announced a 1.05 trillion won investment in a production line, and in November it added a 1.84 trillion won investment in an OLED plant that will produce both large-size television panels and smaller flexible displays.

But analysts still argue that LG Display has some catching up to do in smaller-size OLED panels.

In February last year, Samsung said it would invest 4 trillion won over the next years toupgrade and expand its mobile OLED display facility, adding to its already sizable lead in mobile OLEDs.

TrendForce, a Taipei-based research firm, said in a report earlier this month that LG Display lagged behind Samsung in making small-size OLED panels, and “will try to catch up…by accelerating their timetables for the development and mass production of [OLED] panels.”

Han Sang-beom, LG Display’s CEO, acknowledged the market dynamics in a statement, saying “a paradigm shift to OLED represents both a challenge and an opportunity for the display industry.” The statement also cited forecasts that show flexible OLED shipments will jump sevenfold in the next four years.

Source: THE WALL STREET JOURNAL