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LG Display Q121 Revenue Up 46% Y/Y
LG Display Q121 sales were 6.88t won ($6.175b US), down 8% sequentially and up 46% Y/Y. Operating profit was 523b won ($469.45m US), down 8% sequentially. It is likely that the majority of the gain in profitability is due the rising LCD ASPs. Shipments were down 2.3% on an area basis, and ASPs, also on an area basis, were down 6.8%. While it might seem unusual that LG Display saw lower ASPs during a period when panel prices were rising, it had more to do with mix, which saw a seasonally lower component of small panels, which carry a higher ASP on an area basis. In terms of overall capacity LPL had a 3.7% increase sequentially and a 15.5% increase Y/Y with much the gain attributed Guangzhou.
LG Guidance Q221
Q&A
OLED Capacity Expansion?
LG Display Q121 sales were 6.88t won ($6.175b US), down 8% sequentially and up 46% Y/Y. Operating profit was 523b won ($469.45m US), down 8% sequentially. It is likely that the majority of the gain in profitability is due the rising LCD ASPs. Shipments were down 2.3% on an area basis, and ASPs, also on an area basis, were down 6.8%. While it might seem unusual that LG Display saw lower ASPs during a period when panel prices were rising, it had more to do with mix, which saw a seasonally lower component of small panels, which carry a higher ASP on an area basis. In terms of overall capacity LPL had a 3.7% increase sequentially and a 15.5% increase Y/Y with much the gain attributed Guangzhou.
LG Guidance Q221
- Shipments up mid to high single digits – Typical seasonal change
- ASPs down mid to high single digits – due to continued weakness in small panel demand, due largely to declining orders from Huawei and the wind down of LG’s mobile business. iPhone demand should begin in Q221.
- Component Supply – “Close eye on the market” – A non-answer – Inventory was up 8.3% sequentially in 1Q on lower sales, although full inventory breakdown was not released raw materials should be up as the company stockpiles as many components as possible.
- OLED – Goal to improve yield & productivity – Push to premium to increase profitability – While utilization is high at LGD’s large panel OLED fabs, Guangzhou yield is still low and is key for bringing the segment into profitability.
- Mobile – Preparing for mass production of new models in 2H – Means 2Q could also see weak mobile sales
- LCD TV – Remain Flexible within the available resources – No change in view. With rising panel prices, margins should increase.
- OLED TV shipments were 1.6m units – Flat with 4Q (typically down) – Outpacing overall TV market growth - Price reductions and a 48” model will help this year
Q&A
OLED Capacity Expansion?
- Positive outlook for OLED TV -- capacity plans are based on long-term prospects for the technology and the market, but it seems the company is unsure as to whether it should build out additional large panel OLED capacity. LGD can increase capacity by 30K substrates/month on Korea, but the major decision will be to outfit the Paju Gen 10.5 fab.
- Small panel OLED (Flexible) – Currently have 45,000 sheets/month capacity
- OLED TV Profitability -- Trying to improve yield & quality
- OLED Targets for 2022 --Depends on capacity and the more cautious nature of the company’s 2H outlook.
- OLED adoption in IT products -- IT OLED products is the ‘last frontier. New but slowly developing market and adoption is hinged on relative panel price. LCD IT panel prices have been rising quickly, which works toward closing the spread between LCD and OLED displays, but price still keeps OLED at the top of the price range for IT products. OLED notebooks are becoming more common, but at a slow rate. LG expects a more rapid migration this year because of the smaller gap, but the difference in display quality and performance must be made more apparent to consumers, other than those who work directly with media production. Probably depend on how Samsung progresses in this segment.
- Automotive -- Orders by 15.8% sequentially, including flex OLED – Note that references orders not sales as this is a long cycle business. Hamstrung by the IC shortage. If EV sales recover expect automotive flex OLED to expand on LT basis – Again, orders not sales. OLED is ~30% of automotive orders, which is positive for LG, which needs to fill small/medium OLED panel gaps, but meaningful sales are unlikely this year.
- Automotive revenue recognition -- Once orders are received it takes 1 to 1.5 years for development and then more for production and delivery but will see 4 to 6 years of production.
- What about LCD production -- P7 fab will continue through this year and possibly into 2022, depending on when panel prices decline to breakeven.
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