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LGD To Maintain Status Quo Over The Next Year
CEO Jeong Ho-young said at the company's general shareholders' meeting that "LG Display pushed forward with our three core strategic tasks to strengthen business competitiveness and deal swiftly with changes in market demand driven by the coronavirus pandemic-backed, online-centered lifestyle," held in Paju, northwest of Seoul. " LG Display posted an operating loss of 29.1 billion won in 2020 but was able to reduce the scale of loss drastically as the company recorded surpluses in the third and fourth quarters. Based on forecasts of increased OLED shipments this year, LG Display is expected to post an annual surplus in 2021.
The surplus in 2H20 was a function of the increased LCD prices as the OLED segment continued to show a loss, due primarily to the delays in bringing up the Guangzhou Gen 8.5 OLED fab. The CEO’s lack of discussion on expanded OLED capacity, including the Gen 10.5 Paju fab said more about the company than his reported comments. LGD’s strategic direction is effective on-hold. The company will likely lose LGE as a customer for OLED smartphone panels but is replacing the demand with Apple orders. However, Apple has recently qualified BOE as a supplier of lower tech OLEDs where LGD plays. They cannot rely on LCD panel prices remaining high as TV panel shipments have declined in Q420 and Q121, which is likely to relieve the pressure on rising ASPs. The question is timing, but LG said they would shift LCD production from TVs to monitors and notebooks. LGD is still panning to shutter its Gen 7 LCD fabs and they will need to make up the revenue with OLED TV panels, which will grow Y/Y in 2021, but without any new capacity planned, revenue growth after 2021 is unlikely.
"This year, we are aiming to achieve complete normalization of management and make a new leap," the CEO said, adding that the display maker will accelerate its three key strategic tasks to enable this. The CEO said, "Based on a diversified product lineup from ultra to medium-sized and an expanded customer base, we will focus our capabilities on expanding market dominance, strengthening profitability and actively seeking to find new sources of demand beyond TVs."
The Guangzhou, China, began mass production in July. The factory is capable of producing up to 60,000 substrates/month. Adding this to the production capacity of its Paju plant, this enables 140,000 substrates/month, which equates to a maximum panel production of 8.4m/year. Given LG’s utilization and yields their shipments are expected to max out at ~7m depending on the mix. The company has 19 global TV manufacturers, but LGE and Sony have a 60% share. LG Display hopes to strengthen its flexible smartphone panel busines and is the #2 supplier to Apple.
For LCD panels, the company will focus on panels for laptops and tablets, which hold more competitiveness. As for TV screens, LG is seeking to boost its competitiveness overseas, while reducing production domestically according to demand.
Jeong Ho-young pledged to bolster safety at production plants after a toxic chemical leak occurred at LG Display's Paju plant in January, which resulted in the death of a worker and injuries for several more. Dongjin Semichem and ENF Technology have sent requests to their customers Samsung Electronics and SK Hynix to increase the price of thinners by up to 50%, TheElec has learned. The companies are asking for the raise to come in to affect starting in April. Samsung and SK are running simulations to consider the effects of such a price hike, people familiar with the matter said.
Thinners are base materials used to eliminate unnecessary photoresists in edges of boards and nozzles that spray photoresists in semiconductor and display production processes. Thinners are made out of propylene oxide (PO). The PO are processed into propylene glycol monomethyl ether (PGME) and propylene glycol methyl ether acetate (PGMEA). These are then made into thinners by companies such as Dongjin and ENF. PO is mostly used for polyurethane and cleaners. Semiconductor and display only account for around 5% of the global PO market. Demand is strong from all industries that use PO, but supply was not expanded, causing a price increase of 90% from the beginning of 2020 to year’s end. Prices of PGME and PGMEA have also jumped 80% in the same time period, the person said. The freeze in Texas caused Dow Chemical to halt its PO factory there, which caused prices of the material to increase even further. Costs of PGME and PGMEA have doubled from the second half of 2020 recently, the person said.
Source : THE ELEC, Korea Electronics Industry Media(http://thelec.net)
CEO Jeong Ho-young said at the company's general shareholders' meeting that "LG Display pushed forward with our three core strategic tasks to strengthen business competitiveness and deal swiftly with changes in market demand driven by the coronavirus pandemic-backed, online-centered lifestyle," held in Paju, northwest of Seoul. " LG Display posted an operating loss of 29.1 billion won in 2020 but was able to reduce the scale of loss drastically as the company recorded surpluses in the third and fourth quarters. Based on forecasts of increased OLED shipments this year, LG Display is expected to post an annual surplus in 2021.
The surplus in 2H20 was a function of the increased LCD prices as the OLED segment continued to show a loss, due primarily to the delays in bringing up the Guangzhou Gen 8.5 OLED fab. The CEO’s lack of discussion on expanded OLED capacity, including the Gen 10.5 Paju fab said more about the company than his reported comments. LGD’s strategic direction is effective on-hold. The company will likely lose LGE as a customer for OLED smartphone panels but is replacing the demand with Apple orders. However, Apple has recently qualified BOE as a supplier of lower tech OLEDs where LGD plays. They cannot rely on LCD panel prices remaining high as TV panel shipments have declined in Q420 and Q121, which is likely to relieve the pressure on rising ASPs. The question is timing, but LG said they would shift LCD production from TVs to monitors and notebooks. LGD is still panning to shutter its Gen 7 LCD fabs and they will need to make up the revenue with OLED TV panels, which will grow Y/Y in 2021, but without any new capacity planned, revenue growth after 2021 is unlikely.
"This year, we are aiming to achieve complete normalization of management and make a new leap," the CEO said, adding that the display maker will accelerate its three key strategic tasks to enable this. The CEO said, "Based on a diversified product lineup from ultra to medium-sized and an expanded customer base, we will focus our capabilities on expanding market dominance, strengthening profitability and actively seeking to find new sources of demand beyond TVs."
The Guangzhou, China, began mass production in July. The factory is capable of producing up to 60,000 substrates/month. Adding this to the production capacity of its Paju plant, this enables 140,000 substrates/month, which equates to a maximum panel production of 8.4m/year. Given LG’s utilization and yields their shipments are expected to max out at ~7m depending on the mix. The company has 19 global TV manufacturers, but LGE and Sony have a 60% share. LG Display hopes to strengthen its flexible smartphone panel busines and is the #2 supplier to Apple.
For LCD panels, the company will focus on panels for laptops and tablets, which hold more competitiveness. As for TV screens, LG is seeking to boost its competitiveness overseas, while reducing production domestically according to demand.
Jeong Ho-young pledged to bolster safety at production plants after a toxic chemical leak occurred at LG Display's Paju plant in January, which resulted in the death of a worker and injuries for several more. Dongjin Semichem and ENF Technology have sent requests to their customers Samsung Electronics and SK Hynix to increase the price of thinners by up to 50%, TheElec has learned. The companies are asking for the raise to come in to affect starting in April. Samsung and SK are running simulations to consider the effects of such a price hike, people familiar with the matter said.
Thinners are base materials used to eliminate unnecessary photoresists in edges of boards and nozzles that spray photoresists in semiconductor and display production processes. Thinners are made out of propylene oxide (PO). The PO are processed into propylene glycol monomethyl ether (PGME) and propylene glycol methyl ether acetate (PGMEA). These are then made into thinners by companies such as Dongjin and ENF. PO is mostly used for polyurethane and cleaners. Semiconductor and display only account for around 5% of the global PO market. Demand is strong from all industries that use PO, but supply was not expanded, causing a price increase of 90% from the beginning of 2020 to year’s end. Prices of PGME and PGMEA have also jumped 80% in the same time period, the person said. The freeze in Texas caused Dow Chemical to halt its PO factory there, which caused prices of the material to increase even further. Costs of PGME and PGMEA have doubled from the second half of 2020 recently, the person said.
Source : THE ELEC, Korea Electronics Industry Media(http://thelec.net)
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