Boosting Profitability
LG Display is boosting profitability by lowering the production cost of OLED TV panels at its Guangzhou plant in China, which began mass production in earnest in 2020. The Guangzhou plant’s production cost is up to 14 percent lower than that at the Paju plant in Korea.
Market research firm Display Supply Chain Consultants (DSCC) forecast on Oct. 21 that the production cost of large OLED TV panels at LG Display's Guangzhou plant will drop this year compared to 2020.
Currently, the Guangzhou plant can process 60,000 glass substrates per month, similar to Paju plant’s capacity of 70,000 substrates per month. LG Display is the only display maker that produces OLED panels for TVs.
According to DSCC, Guangzhou plant’s production cost was higher than that of the Paju plant until 2020. But LG Display lowered the total cost at the Guangzhou plant by lowering depreciation expenses, labor costs, overhead costs and sales management expenses. In particular, in the case of 48-inch products, their production cost in China is estimated to be 13 to 14 percent lower than that in Korea. DSCC also predicted that 65-inch products will also show similar price competitiveness.
DSCC forecast that LG Display's sales of large OLED panels in 2021 will nearly double to seven million to eight million units from 4.4 million units in 2020. As sales volume expanded, prices by size also changed. Until 2020, 55-inch panels were the cheapest, but starting in 2021, 48-inch UHD panels are 20 percent cheaper than 55-inch UHD panels.