Yesterday, LG Display announced record Q4 2016 profits and the company has confirmed it is to continue its strategy of investing these profits into its OLED business. The company has repeatedly explained how it will be using the profits generated by its high quality LCD panel business to bolster its OLED research, development and ultimately production lines. LG Display’s Chief Financial Officer, Kim Sang-don, outlined the company’s Q4 2016 sales makeup: 38-percent for television displays, 31-percent for smartphone display panels, 17-percent for laptops and tablets and 14-percent for monitors. The company also explained how rising LCD panel prices and a favorable currency movement had helped the company post a near 1,400-percent increase in Q4 profits compared with 2015. Demand for its LCD panels has increased, thanks partially to Samsung shutting down some of its LCD production facilities and also because customers are wanting to buy smart television sets with displays greater than 32-inch.
For 2017, LG Display has announced that it is to invest an additional 5 trillion won, approximately $4.3 billion, into OLED production facilities. 70-percent of this investment will be into “securing large and small and mid-size OLED manufacturing facilities.” As a part of this investment plan, Kim explained how LG Display’s LCD manufacturing capacity would be reduced by “a few percent” as it converts LCD assembly lines into OLED production lines. This will involve taking factory lines offline as it switches over to the different product. LD Display will be focusing on large OLED panels and is aiming to double its current monthly production OLED television set capacity from 30,000 units to 60,000. The company also explained that during 2016 the company’s OLED panel achieved “the industry’s golden yield of 80-percent.” For 2017, LG Display will roll out their new product, crystal OLED, and is planning to “solidify our leadership in the high-end OLED TV market.” Naturally, part of the $4.3 billion planned investment will be used to fund research and development.
The next important part of LG Display’s 2017 strategy is to increase the production of its small and mid-size OLED panels, designed for the smartphone market. The company will be opening a new production line in its Gumi factory, in the South Korea North Gyeongsang Province, in the third quarter to manufacture sixth generation POLED (plastic OLED) display technology. LG Display is also planning to expand its OLED product line to include commercial signs and automotive panels.
LG Display is potentially caught in a difficult place, but the business performed well during the final quarter of 2016. Samsung have very much the dominant market share in the OLED market and there are a large number of Chinese companies building LCD panels, often for a considerably cheaper price. LG Display recognize that a number of Chinese companies are investing into new generation super large LCD factories, but currently the company are remaining flexible. Kim highlighted the company will finalize their investment strategy in this regard “by the end of the first half of the year.”