LG Display Co, a famous South Korean display maker to stop producing liquid-crystal display (LCD) panels for TV by the end of this year at the earliest, industry sources said on Monday, amid falling profitability and fierce competition from Chinese rivals. LG Display said in a regulatory filing last week that it was reviewing an end of production at its LCD TV panel factory in Paju, north of Seoul, without specifying the exact date of production suspension.
The panel maker has been scaling down its loss-making LCD TV panel business, with a goal of discontinuing domestic production as early as possible. It has also said it will reduce production in China in a phased manner.
For the July-September period, the company reported an operating loss of 759.3 billion won ($584.9 million), compared with an operating profit of 529.3 billion won a year ago. Sales fell 6.3 percent to 6.77 trillion won during the same period.
Demand was falling at an “unprecedented level” both for LCD and premium organic light-emitting diode (OLED) panels, the company said during an earnings call in October, after years of pandemic-driven strong growth for personal IT devices.
It warned the challenging business environment will continue into next year amid heightened risks from a looming economic downturn, diminishing demand caused by weaker consumer confidence, as well as clients’ attempts to minimize inventory.
Facing mounting challenges, the company has been trying to turn its business around by putting more resources in LCD panels for IT products and high-margin OLED business and expanding its high-value make-to-order business.
It is also said to be considering a paid-leave program for factory workers.
Kim Yang-jae, an analyst at Daol Investment & Securities, forecasted OLED panels will make up for more than 60 percent of LG Display’s revenue by 2023, up from less than 40 percent in 2021.
“Operating losses will be expected to narrow in the fourth quarter as the company’s reorganization started in earnest, but it will take time until it swings to profit again,” he said, citing lack of positive macroeconomic factors that could boost consumer demand.
LG Display’s fourth-quarter operating profit is forecast to be around 515.9 billion won, according to an estimate by Yonhap Infomax, the financial news and information arm of Yonhap News Agency.
Samsung Display, Samsung Electronics’ display unit, had scaled down its LCD TV panel business since mid-2010 and completely stopped production in June.
LG Display said it will announce more details about the planned end of production on December 30.