Samsung and LG Postpone Additional Fab Closings
April 17, 2017
The shortage of TV size panels brought about by the closing of some Gen 7 and smaller fabs and the decision by Sharp to keep in-house production has created a temporary shortage of panels and an increase in ASP for TV brands in Korea and other countries. As result, LG Display and Samsung are rethinking their strategy to close or convert their LCD fabs. Etnews reported that Samsung Display and LG Display have postponing plans to convert or close LCD production lines due to the shortage of LCDs for TV and IT panels. LG Display will postpone closing its Gen 3.5 (P2), Gen 4.5 (P3), and Gen 5.0 (P4) production lines, which are located in Gumi. Their schedule to stop production at the end of last year was delayed to the first half of this year but has been postponed yet again. However, LG is currently converting its Gen 5 IPS fab into OLED production line for lighting. "Although we predicted that the shortage in supply of LCD panels will ease during second quarter, supply and demand is still tight just like it was in first quarter”, said a representative for LG Display. "Because this situation has continued longer than we expected, we are currently focusing on producing LCD panels as of now." Samsung Display was expected to stop operating its Gen 6 line (L6) after beginning conversion of their Gen 7 (L 7-1) line to a Gen 6 OLED fab at the end of last year. Reports of closing a 2nd Gen 7 (L7-2) line were rumored by Samsung claims there were no such plans.
There were several reports in the Chinese media, that the Chinese government asked local TV brands and other industries to stop buying Korean LCD panels. The purpose is to give BOE, CSOT and other local panel factory capacity to catch up before buyers turn to Taiwan's group AUO and Innolux. Chinese experts estimate a total loss to South Korea's economic production of 17 trillion won, equivalent to gross domestic product (GDP) of 1.07%.
These two items are clearly a “state of conflict” as the Korean’s are net buyers of panels from China, not net sellers.