If the Chinese LG Display factory located in Guangzhou was in the spotlight in 2020 regarding the difficult inauguration of its Oled panel production line (see our news LG Display Guangzhou Oled TV factory: explanations of a chaotic production (still postponed), it has been manufacturing LCD panels since the first half of the 2010s.
LG Display LCD factory in Guangzhou, from nugget to financial abyss££££
Formerly an essential cog in the LG Display production tool, the Guangzhou LCD factory has in just a few years become a financial abyss for the Korean firm. The Russo-Ukrainian war which started in February 2022 and the gloomy global economy which resulted from it took its toll on its profitability. If we add to this a drastic drop in the selling prices of LCD panels following an overabundance of supply orchestrated by Chinese manufacturers keen on ever-increasing competition, LG Display had to stop an LCD panel manufacturing line called CA- at the end of 2022. 1.
LG Display relaunches production of LCD panels for Samsung Visual Display…££££
In January 2024, the CA-1 line was relaunched following an increase in orders for LCD panels from customer Samsung Visual Display (Editor's note: the division in charge of TVs at Samsung Electronics), the leader of the TV market wishing to disengage from one of its important Chinese suppliers of LCD panels, BOE (Beijing Orient Electronics), accusing it of having infringed its patents on Oled technology for smartphones (a matter now in the hands of the courts). Indeed, if in 2023 LG Display delivered a total of 3 million LCD panels to Samsung, this figure should reach 5 to 6 million units following the five-year agreement concluded recently between the two Korean groups (see our news Samsung and LG Display Oled/LCD TV agreement, signed for 5 years!). Please note, the Guangzhou factory is today the last LG Display production site for LCD panels and its “relaunch†also benefits to a (much) lesser extent LG Electronics (1.3 million panels delivered in 2023). and 2 million planned for 2024) which sources new supplies (a little) from its subsidiary.
Sale of the Guanzhou LCD factory to sustainably turn around LG Display…££££
As already mentioned in our news on the LG Display/Samsung agreement, orders for Oled and LCD panels from the latter will therefore allow the first to raise his head. And while we expected to see the rumors of the sale of the Guangzhou LCD factory evaporate, this is not the case. After the Chinese groups Skyworth and BOE were mentioned for a possible takeover, it is now CSOT (TCL) which would hold the rope (what about the Oled panel manufacturing lines? The question remains unanswered...), a potential buyer which would satisfy both LG and Samsung. As a reminder, Samsung is a shareholder of both CSOT (since the end of the 2010s) and TCL (since 2021 and the sale from Korean to Chinese of the 8.5 generation Samsung Display LCD panel production line), a situation which would not pose a problem for the successful completion of the LCD side of its five-year contract with LG Display. This would simply be provided by TCL/CSOT. For LG, in view of a TV market expected to be sluggish in the years to come (see our Oled TV news, the golden age already over?), even more the Oled TV segment, a sale of the Guangzhou LCD factory would therefore make it possible to sustainably turn around the LG Display firm, which has a significant debt burden. An opportunity also to clear the accounts of the LG Group holding company and to be protected from yet another sudden deterioration in the TV market (intensification of the Russia-Ukraine war, extension of the armed conflict in the Middle East, tension between China and Taiwan…). To be continued.