The South Korean government allowed LG Display to build an OLED panel manufacturing plant in Guangzhou, China after five months of consideration.
LG Display’s total investment in the plant is estimated at five trillion won (US$4.5 billion) and approximately 80% of the total investment is expected to go to South Korean component suppliers according to industry sources.
The construction of the plant is scheduled to be completed in the second quarter of 2019, and then the plant produces 60,000 8.5-gen OLED panels a month. For reference, LG Display’s large OLED panel supply capacity is 55,000 units a month now. The panels produced in Guangzhou are slated to be used in the OLED TV market, which is growing very rapidly these days. According to market research firm IHS, global OLED shipments are estimated to skyrocket from 166,000 units to 1.734 million units a year between 2014 and this year.
“South Korean panel manufacturers can maintain their dominance only by focusing on the OLED panel market rather than LCD where their gap with Chinese suppliers is very narrow,” LG Display explained, adding, “In addition, OLED panels are not a zero-tariff item according to the FTA between South Korea and China and OLED panels and sets exported from South Korea to China are subject to a tariff of 15% and 30%, respectively.”
At present, Samsung Display accounts for more than 97% of the global mobile OLED panel market while LG Display is the only manufacturer of large OLED panels for use in TVs. LG Display is aiming to further widen its gap with Chinese companies by running the plant in Guangzhou. When it comes to OLED TV panels, Chinese companies are still in the stage of pilot production.
“This type of OLED panels has a high ratio of analog techniques that cannot be turned into manuals with ease and, as such, copying the technology is almost impossible,” the company explained about the risk of tech leak, continuing, “There is no need to be worried because the investment will be made not in a Chinese company but in LG Display China.”