LG Display has reported a big loss in its recent Q3 earnings release, its third bad quarter in a row – forcing out the longtime CEO, prompting a round of voluntary departures and most interesting in the context of the commercial display business, the start of a move away from LCD.
LG Display reported a loss of $370 million USD for the July to September quarter. Revenues were up 6% Q/Q but down 10% Y/Y, and the loss compares with a net profit in Q3 2018 of $16 million.
The loss was higher than expected by market analysts, and 2019 losses have already surpassed $900 million. Q4 is also expected to be bad.
LG will “downsize” two of its LCD TV panel production lines in South Korea, Reuters reports.
Samsung is also reportedly rethinking its LCD production capacity because of a market glut and Chinese competition. Its third quarter had an operating profit, though the numbers were sharply down.
LG has placed a big bet on OLED – displays that are undeniably gorgeous, but also very expensive. The TV and commercial display market may go there one day, but more conventional LCDs don’t exactly look terrible in comparison.
Both of the big Korean display companies have been shifting business and marketing focus away from mainstream LCD because it will be hard or near-impossible to compete with lower cost LCD product coming out of China – those operations heavily subsidized by the central government.
For LG, it is premium OLED. For Samsung, it’s QLED (LCDs with Quantum Dots enhancement filters) and, possibly, OLEDs with Quantum Dots. The latter would address the limited brightness issue display nerds see in OLED.
Time will tell, but the result of all this may be less availability of LCD from the big Korean companies, or LCDs that may show their brand, but come out of plants in China (or Taiwan) instead of South Korea.
There are numerous manufacturing giants like BOE, Innolux and AUO that make shiploads of LCD for other brands, but don’t have their own logos on panels.
Reports market analyst IHS:
Before 2011, China’s front-end FPD production capacity was negligible, while Korea accounted for almost 50 percent of the global market. However, backed by wide-ranging central government policy support and regional government financial assistance, China rapidly increased its share to 23 percent by 2015.
In 2019, China’s capacity has risen to more than 153 million square meters or 46 percent of the total, compared to 24 percent for both South Korea and Taiwan, according to the AMOLED and LCD Supply Demand & Equipment Intelligence Service by IHS Markit.
With five Gen 10.5 factories expected to be in full production by 2023, China will control FPD production, with 62 percent of worldwide capacity, almost four times as much as any other region.
“Chinese companies originally focused on assembling modules and sets, but over time they’ve climbed the display value chain to full LCD production—and now they’re aggressively pursuing OLED manufacturing,” said Charles Annis, senior director at IHS Markit. “BOE, for example, produces high volumes of almost every size and type of LCD, and is shipping millions of flexible AMOLED smartphone panels monthly from its B7 Chengdu factory. On top of that, the company is either producing or has plans to pursue alternative technologies, such as OLED on silicon, electrophoretic displays (EPDs), white OLED (WOLED) and inkjet-printed OLED TVs and augmented reality/virtual reality displays. BOE’s goal is to lead not only in display production, but also in technology.”
Dave Haynes is the founder and editor of Sixteen:Nine, an online publication that has followed the digital signage industry for some 14 years. Dave does strategic advisory consulting work for many end-users and vendors, and also writes for many of them. He’s based near Halifax, Nova Scotia, on Canada’s east coast.