LG Display is in crisis for the Chinese LCD screens and bet on the OLED to recover

Beyond the sale of televisions, which lately is not giving badly, LG is one of the largest providers of screens for the electronics industry. Its subsidiary LG Display has enjoyed for years a comfortable situation as a producer of LCD panels, but in less than a year the South Korean firm has gone from having the leadership to sink almost catastrophic.

According to news agency Reuters , sales of LG LCD panels suddenly evaporated after Chinese manufacturers, led by BOE Technology Group, accelerate the pace of investments to compete globally. Over the past five years, LG Display had registered significant benefits on the shoulders of a market with a limited number of suppliers, but the lack of foresight has led to losses.

Bang & Olufsen uses OLED 4K panels and the LG Smart TV platform.

The situation is such that just a year ago LG had eight production lines in its native South Korea and a ninth in China. After the closures of the last few months, it only keeps two factories active in South Korea and its existing facilities in China. It has also canceled plans to open a new factory that does not make sense at this time.

The market situation is not favorable for LG. Reuters notes that the price of 50-inch LCD panels has fallen by approximately 32% year-on-year, reducing profit margins that in the lower segments are directly negligible. Meanwhile, LG Display has three consecutive quarters of losses and has been forced to activate an “emergency management system”, asking its employees to look for cheaper flights when they have to travel and reduce company meals.

LG Display Vice Chairman Han Sang-beom smashes a discarded 55-inch LCD panel with a hammer during an event at their factory in Paju, South Korea, April 26, 2018. LG Display/Handout via REUTERS

Getting out of this situation will not be easy. Recovering the lost ground as manufacturer of LCD panels is almost mission impossible at this point, and so it was staged by the vice president of LG Display last April when he armed himself with a hammer to destroy an LCD screen in front of the cameras. Now the company’s efforts are focused on the production of large-format OLED panels, where it has no competition.

According to estimates LG Display, by 2020 40% of its revenues will come from the sale of OLED panels, when they currently represent 10%. “Given that OLED is our response and solution to the crisis, there is nothing we can do other than tighten our belts and drive the OLED,” an employee of the company told Reuters. Nor is there many more outlets.

LG Display expects its OLED screen division to benefit during the third quarter. It will not be only through LG’s own TVs. Its panels are also used by brands such as Panasonic, Philips, Loewe, Bang & Olufsen and Sony, which calibrate them according to their respective needs and provide their own image processing technologies.

The launch of the first 8K panels will possibly serve to maintain the interest of LG’s partners, generally interested in factors such as contrast.

That said, OLED 8K is not the only leading technology that LG Display is investing in. During this past IFA 2018 the company also presented its first MicroLED screen, with a total of 173 inches and 4K support. Of the emissive type, the MicroLED technology combines the absolute black and infinite contrast of the OLED with the blinding brightness of the LCD LED, but it still has a long way to go before it becomes available to all consumers and Samsung takes it for now the front .