Expanding OLED Production
As LG Display announced its third-quarter operating profit on October 25, the company said it would increase the share of organic light-emitting diode (OLED) displays in total sales from 10 percent this year to 20 percent next year. It also added that it would boost its sales of OLED TV panels from 1.7 million this year to 2.5 million to 2.8 million units next year.
LG Display expects to make profits in large OLED business from the fourth quarter next year based on it. Kim Sang-don, chief financial officer (CFO) at LG Display, said, “Internally, we aim to show an operating profit gain in the large OLED sector in the second half of next year.”
In addition, the company reaffirmed its plan to invest 20 trillion won (US$17.74 billion) by 2020 and increase the annual shipments of large OLED panels to 6.5 million units. Kim said, “We will focus on the investment in 2018 and 2019. We will announce specific figures when they are confirmed.” He also added that LG Display will generate sales for small plastic OLED (POLED) panels, which are becoming more widely used in smartphones, from 2019 in earnest.
LG Display has such confidence in OLED business because the company believes that the demand will grow faster as the market response is better than expected. An official from the company said, “Sales of OLED TVs manufactured by European TV makers grew 40 percent last month alone compared to the previous month.”
Outside analysts take a similar stance. Market research firm IHS Markit expects that OLEDs will account for 11 percent of the global TV market in terms of sales in 2020, up from 4 percent this year. LG Display also explained about Samsung’s recent remarks that OLED TV screen leave an afterimage. Kim said, “There seems to be an intentional “noise marketing” strategy in some markets. We will get results according to users’ judgment and decision. Thirteen TV producers has chosen OLED panels and the demand is on the rapid rise.”
Meanwhile, LG Display posted 586 billion won (US$519.73 million) in operating profit in the third quarter due to the fall in the unit price of liquid-crystal display (LCD) panels, down 27.1 percent from the previous quarter. The company saw its sales rise 5.2 percent to 6.97 trillion won (US$6.18 billion) over the same period. The price of LCD panels will continue to drop in the fourth quarter. However, profitability will improve as the downward trend slows down.