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Musing on Financials
 
LGD CEO Expects a Return to Profitability in 2020
January 10, 2020
 
LGD’s new CEO, Chung Ho-young, gave a short interview at CES, where he said
 

• Profitability should return in 2H 2020, conditional on:
  • Guangzhou Gen 8.5 OLED fab moving to mass production in 1Q – We estimate that the fab will be producing 22,500 sheets in 1Q unyielded and 10,625 sheets yielded out of a potential (raw) capacity of 90,000 sheets/month has taken longer than expected to build and optimize
  • Expected improvement in small-mid size OLED display business – 
• Expect operating profit of 10% in 2020 – Seems to assume both better small panel OLED utilization and yield, and some recovery on LCD TV panel pricing. 
• LCD oversupply still an issue in 2020
• Ship 6m large panel OLED displays in 2020 – Close to original estimate of 6.5m vs. 3.3m units delivered in 2019.  The implementation of MMG (Multi-mode glass) is a big variable that can change the total unit number for the year as it allows for more units from the same amount of glass, while also raising efficiency.
• Foldable in 2H 2020 -- Notebook size – In-folding – Starting at notebook size, which they showed privately at CES is a good strategy as it removes much of the competition. They showed no smartphone foldable displays at CES privately or publically
• OLED display sales expected to be 40% of revenue in 2020 
• Display sales to ‘new’ industries to be >30% in 2020 Initial unit volumes will likely be small (high-end vehicles) but developing a relationship with automotive brands has a long-term payoff when such displays become a bit more commonplace. As indicated in the CES write-up, LG supplied the 38” console for the Cadillac Escalade and has a new, close relationship with GM. They also showed what looked to be Boeing concept of windowless planes and multiple OLED displays per 1st class passenger.