News: Crisis-strong LG Display on “a Soft and Speedy Voyage” | BusinessKorea

Monday, January 22, 2018

Decisive investment during recession strengthens the company’s No.1 position
15 October 2009 - 7:20pm

Investing in crises, a confident and audacious investment in defiance of the financial crisis...‘catching the present and the future together’ and maintaining the No.1 rank in the industry

LG Display Co., Ltd., has not changed or suspended investment in its eighth generation production line and second production line despite consumption drastically falling due to the financial crisis in the latter half of 2008. The eight generation line produces large glass plates while the second production line produces premium WIDE-type IT panels such as those used in laptops. The company persisted with its original plan to cut through Taiwan’s pursuit and drastically increase the market share gap between itself and Taiwanese companies.

Taiwan, which achieved a 46% market share based on quantity in the first quarter of 2008, found its share reduced to 38.3%. Korea, which took 40.8% in the first quarter of 2008, secured a 52.2% market share in the first quarter of 2009 to reconfirm its hegemony in the global LCD market.

The company tends to present new technologies and products at very short intervals and displays even more aggressive tendencies in R&D. Japanese companies which led the global IT industry maintained their No.1 rank by the same means. These companies held onto their market position by continuing to develop new technologies and products even though they might not produce immediate profits (before commercialization) while maintaining or strengthening market hegemony (market share).

When these new technologies or products are commercialized and their markets made available, late-arriving companies find it difficult to find opportunities. This is the case with LG Display maintaining its ‘everlasting first rank paradigm’.

Audacious investment during recession strengthens the company’s No.1 position and contributes to economic facilitation

The LG Display board of directors reviewed market status and the company’s current manufacturing capacity on July 15, 2009 and decided to expand the eighth generation production line at the Paju Cluster P8 Plant.

The eighth expansion line (board size: 2,200mm X 2,500mm) plans to produce LCD panels mainly for 55°§47°§32 inch TVs along with the existing eighth production line which began operation in March 2009. Mass production will take place from the latter half of 2010. It plans to secure a manufacturing capacity of 60,000 (based on glass plates input) during the latter half of 2010 and increase this to 120,000 during 2011 based on the market environment.

Active measures for the growth of the TV LCD market and customers’ increasing demands

LG Display entered into mass production at its P8 plant and P6E plant in the first half of 2009 as planned despite the global recession. However, increasing demand in Chinese and North American markets as well as the expanding market share of customer companies meant the company was unable to cope with all the orders made. This investment is expected to resolve the supply shortage and help achieve mutual growth for itself and its major customers.

LG Electronics and Visio, main customers of LG Display, are increasing their market shares in LCD TVs while stable growth for Phillips and Customers in Japan and China are expected, suggesting future market control and profit expansion.

Active measures for the growth of the TV LCD market and customers’ increasing demands

LG Display entered into mass production at its P8 plant and P6E plant in the first half of 2009 as planned despite the global recession. However, increasing demand in Chinese and North American markets as well as the expanding market share of customer companies meant the company was unable to cope with all the orders made. This investment is expected to resolve the supply shortage and help achieve mutual growth for itself and its major customers.

LG Electronics and Visio, main customers of LG Display, are increasing their market shares in LCD TVs while stable growth for Phillips and Customers in Japan and China are expected, suggesting future market control and profit expansion.

Strengthening its world No.1 position during recession based on continued investment

Considering the LCD industry is an equipment industry necessitating large-scale investment, the continued investment by LG Display can be construed as an attempt to occupy a more advantageous position in the LCD industry where competition is severe. Investment in P8E site will take the total investment made in Paju Display Cluster to over 12 trillion won. The investment will facilitate business upturn as well as directly create 2,000 new jobs.

Furthermore, equipment localization of LG Display will facilitate SMEs producing equipment and materials and reinforce their competitiveness. This will lead to the virtuous circle of employment and investment to solidify the nation’s position as a display-strong country.

LG Display creating a new market with the technological brand of ‘IPS’

LG Display is creating new markets by attracting customers in BICs (Brazil, India and China) by placing ‘IPS’ at the forefront.

Based on its confidence in the technological excellence of IPS, the optical viewing angle technology applied to LCD panels, LG Display aims to escape from the traditional concept that ‘direct marketing toward consumers is difficult for B2B companies’ as well as utilizing marketing activities unique to B2B companies for new market creation in BICs in order to realize a new paradigm that ‘panel technologies can directly influence TV purchase.’

According to Display Search, a market research company, the average annual growth of the LCD TV market in mature markets such as Europe and the USA will remain in the mid one digit area from 2009 to 2013. However, China is expected to achieve 16%, Asia 37%, and Latin America, 26%. In addition, BICs are expecting aw demand for LCD TVs replacing CRT TVs, and the countries are being highlighted as ‘new markets’ and as such are creating severe competition among display manufacturers.

In these areas, LG Display produced logos for ‘IPS’ technologies and used them in newspaper advertisements, POP (point of purchase) marketing, and catalogues. Regular training events are held regarding IPS technologies, their principles, and excellence for staff members, from marketing executives to sale staffs at electronic appliance shops, to increase awareness of IPS.

Concentrated marketing toward China based on the establishment of an IPS camp with TV set manufacturers in China

In China, LG Display emphasizes the excellent recovery of liquid crystals after being touched among the many other fine features of IPS. The logo ‘Kyungbyung (Yingping)’ meaning a firm panel in Chinese was separately created for marketing, and is much favored by Chinese consumers who prefer something strong.

Bolstered by this, LG Display established an ‘IPS Camp’ promoting IPS with major local and global TV set companies in China in September 2008. Eight companies participated in the ‘IPS Camp’ including Changhong, considered to be the best performing company in the Chinese market, and Haier, Hisense, , LG Electronics, and Panasonic.

Conducting sports marketing in Brazil, a country of soccer lovers

In June 2009, LG Display entered into a sponsor contract supporting with Sao Paulo Football Club (SPFC), Brazil’s most prominent professional soccer team. The SPFC, established in 1930, has maintained its No.1 for three consecutive years. The joint sponsorship with LG Electronics is expected to increase IPS awareness by exposing IPS logos on uniforms, soccer field boards, and wall boards.

Brazil is a well-known country for soccer, having recorded entrance into all World Cup Finals, a feat unique in the history of the event, as well as winning the competition a record five times. Knowing how important Brazilian people of all ages take soccer, the company, is conducting sports marketing, an unusual move for a B2B company.

Producing and releasing the first TV commercial ad for 1.2 billion Indians

In India, the company produced a TV commercial after taking into account the people there being enthusiastic TV watchers. “Panels produced by competitors leave afterimages when touched but IPS panels leave none”. The advertisement was aired during the 2009 Cricket World Cup in May and June, and is evaluated to have increased IPS awareness among 1.2 billion Indians.

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