Future Investment
On March 27, LG Display announced that it would borrow 1 trillion won (US$771 million) from LG Electronics to sharpen its OLED business competitiveness and preemptively secure operating funds. The borrowing period is three years, from March 30 2023 to March 30, 2026. Its interest rate is 6.06 percent per annum. It is a borrowing payable in one year with a two-year grace period.
As of the end of 2022, LG Display’s cash and cash equivalents amounted to 1.8246 trillion won (US$1.4064 billion). Nevertheless, it received the preemptive loan in order to boost its competitiveness in the global OLED industry, where the display giant is taking the lead, and lay the foundation for stable operations and the future growth of the OLED business.
LG Display plans to steadily expand its share in the premium TV market in which it has unrivaled competitiveness based on strong financial soundness in the future. It will employ a strategy to secure growth engines by strengthening product competitiveness with technologies with super-wide gaps with its followers, such as META technology, and accelerating new market-creating businesses such as transparent and gaming OLED panels.
According to market researcher Omdia, the market share of OLED TVs among premium TVs costing more than US$1,500 is expected to increase from 36.7 percent in 2022 to 46.1 percent in 2023 and to reach 53.5 percent in 2024.
In the small and medium-sized OLED sector, LG Display has decided to further strengthen its competitiveness in the automotive display business by using differentiated technologies such as second-generation tandem OLED panels for vehicles, which began volume production this year.
Meanwhile, while economic uncertainties still linger, companies are expanding financial cooperation with affiliates of their parent business groups to increase business capabilities and promote stable operations.
In February, Samsung Electronics borrowed 20 trillion won (US$15 billion) from its subsidiary Samsung Display for the purpose of securing operating funds. This was because, in a situation where the semiconductor industry is deteriorating, the Korean semiconductor giant wanted to secure funds to prepare for future demand and proceed with technology investment without a hitch.
In December of last year, SK On received a paid-in capital increase of 2 trillion won (US$1.5 billion) from SK Innovation to secure investment funds to build a global production base. The company announced that it will continue to invest to preoccupy the electric vehicle battery market in the future even in the face of difficulties such as a slump in the semiconductor industry and rising raw material prices.