Jumping First Hurdle
According to industry sources, a subcommittee under the electronics expert committee of the Ministry of Trade, Industry and Energy (MOTIE) held a third round of meeting related to LG Display’s investment in the Guangzhou plant on October 30 in Seoul. Based on the discussion, the electronics expert committee will decide whether to approve OLED investment in Guangzhou by the company and put this on the agenda of the industrial technology protection committee.
An official from the industry said, “LG Display tried hard to explain how to prevent technology theft and maintain the technology gap with China.” As the third subcommittee meeting finished, LG Display’s OLED investment in the Guangzhou plant will gather momentum further.
The subcommittee was formed after Minister of Trade, Industry and Energy Baek Woon-kyu expressed his negative view on Samsung Electronics’ investment in the Xian plant and LG Display’s investment in the Guangzhou plant. At that time, Baek said, “China’s large-scale investment in semiconductors and approach to the OLED market can threaten our industry.” Even after that, he specifically mentioned the Chinese government’s retaliation after South Korean companies’ investment in their battery plants.
As the subcommittee approved the company’s OLED exports after many twists and turns, LG Display is now able to come up for air. However, the company has no time to look back because it should scramble to convert production line from LCD to OLED. There are still administrative procedures, including industrial technology protection committee in the electric and electronic sector. Considering precedents, it will take a month more. But, it can be done faster than expected as it already went through the subcommittee several times which are unusual.
It is for crucial LG Display to push into the Guangzhou plant because it will not only help the company meet the growing demand of large OLEDs through the investment in the 8.5-generation OLED but also grow the market. In addition, a higher tariff is applied to display panels unlike semiconductor chips – 5 to 15 percent on incomplete and 30 percent on complete products. A considerable number of customers are located in China and it takes huge logistics costs.