LG Display to open China OLED plant

Seoul

LG Display Co is close to starting organic light-emitting diode (OLED) production at a new factory in Guangzhou to sell more of the next-generation screens, even as Chinese rivals gear up to enter the market.

The South Korean display maker will manufacture 130,000 OLED plates (which are divided into screens) each month once it gets China's go-ahead for the expansion of the plant, according to Kang In Byeong, LG Display's chief technology officer.

Although the approval has been delayed, he is expecting it soon. Another facility north of Seoul will probably make OLEDs as well, while LG is winning orders to make screens for premium carmakers for models next year, Mr Kang said.

Used in Apple Inc's iPhone X and Samsung Electronics Co's top-end phones and LG's high-end TVs, OLED screens use less power and show more accurate colours than liquid-crystal displays (LCDs). Their ability to flex and bend makes the technology more appealing for smartwatches, premium phones and dashboards in luxury cars. While LG Display and Samsung have made South Korea the world's biggest OLED supplier, the companies know that they are facing challenges as China steps up investment.

"Opportunities and risks co-exist in China," Mr Kang said in an interview. "We thought China would welcome us with open arms, but it's holding off on the approval a little. It's all a process. Display makers see us as a rival, while local customers welcome us."

The shares of LG Display were down 4.3 per cent in early trading on Tuesday. The stock has declined about 40 per cent this year.

Seoul-based LG Display said in January that it is planning to spend 20 trillion won (S$24.3 billion) by 2020 on OLED production, forecasting that output will more than double and make up 40 per cent of sales. The company's LCD business is already facing lower margins as Chinese rivals step up manufacturing, creating a glut of screens and crimping prices.

As a result, Chinese display makers are also getting serious about OLED. BOE Technology Group Co, which gained market share through aggressive pricing and sacrificing profitability, is now turning its attention to OLEDs.

The competition is starting to hurt. LG Display posted its first operating loss in six years, and Samsung's display unit saw its income cut 70 per cent in the first quarter. "It's not about Samsung versus LG," Mr Kang said. "It's about Korea versus China."

Still, South Korea remains about four to five years ahead of China in OLED technology, Mr Kang said, adding that LG Display began mass-producing OLED televisions in 2013, something that BOE and Shenzhen China Star Optoelectronics Technology Co have yet to do.

"It's fortunate we have something called OLED, and China isn't yet good at it," he said. "Our biggest concern is how competitive we can be using OLED and how long we can stay so."

Samsung is planning to unveil a bendable-screen smartphone that will probably used OLEDs later this year. Apple is also on track to use OLED in two of three new models later this year, and is in talks with BOE, people with knowledge of the matter have said. For cars, OLED is ideal for building curved displays that can replace dashboards and speedometers.

"The key for LG Display is to have a wider customer base in order to boost adoption," said Simon Chan, a Bloomberg Intelligence analyst. "Currently, Chinese firms are targeting OLED for smartphone use, and LG Display is also ramping production, so competition in this segment could be more fierce." BLOOMBERG