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LG Display to Exit LCD Market, Selling Guangzhou Plant Amid Chinese Competition

Transitioning focus to OLED technology, LG Display seeks to offload its last LCD facility to concentrate on future growth areas
South Korea
l 034220.KO Mid and Small Cap 2000
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LG Display Co. is making a strategic exit from the liquid crystal display (LCD) industry, putting its Guangzhou, China-based LCD panel plant on the market. This move comes as the South Korean company shifts its focus towards the more lucrative organic light-emitting diode (OLED) sector, facing stiff competition from Chinese manufacturers. The Guangzhou facility, LG Display’s sole remaining LCD factory, has attracted interest from leading industry players, including BOE Technology Group Co. and China Star Optoelectronics Technology (CSOT), with the sale expected to conclude by June’s end, potentially fetching up to 2 trillion won ($1.5 billion).

The decision underscores LG Display’s strategic pivot away from LCD production, a sector where it once led globally alongside Samsung Display Co. However, the landscape has dramatically changed since the mid-2000s, with Chinese companies, buoyed by state subsidies, offering LCD panels at significantly lower prices, eroding the market share and profitability of Korean firms. This industry shift has led LG Display to incur substantial losses, prompting a reevaluation of its business model.

The sale of the Guangzhou plant, which started operations in 2014 and represents a significant investment of around 4 trillion won, marks the end of an era for LG Display in the LCD market. The facility is renowned for its advanced manufacturing capabilities, including in-plane switching (IPS) technology, enhancing image quality and viewing angles. Its strategic location and client base, featuring major global and Chinese TV manufacturers, make it an attractive asset.

Proceeds from the sale are earmarked for further investment in OLED technology, where LG Display holds a competitive edge. This includes expanding production facilities and enhancing OLED technology, integral to the company’s future growth strategy. OLED’s advantages, such as self-illuminating pixels and the ability to produce thinner, lighter, and more flexible displays, position LG Display favorably in the high-end consumer market. This strategic shift underscores the company’s commitment to innovation and leadership in the display technology sector.

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