LG's China-based LCD manufacturing facility changes hands for $1.5 billion; company now concentrates on OLED technology
In a strategic move to bolster its position in the next-generation display market, South Korean tech giant LG Display has announced the sale of its China-based LCD plant and its exit from the large-area LCD market. The company has sold its Guangzhou LCD production line to TCL China Star Optoelectronics Technology (CSOT) for approximately $1.5–1.6 billion, marking a significant step towards investing in OLED technology development.
This sale will enable LG Display to redirect over half of the sale revenue towards strengthening its OLED operations and improving financial stability. The company plans to invest approximately 1.26 trillion won (around $900 million) into new OLED production equipment, with a focus on enhancing its manufacturing capacity for small- and mid-sized OLED panels used in smartphones, IT devices, TVs, and monitors.
The shift from LCD to OLED aligns with growing market demand, particularly for premium OLED TVs and mobile OLED displays. LG Display aims to maintain and grow its competitive advantage in these sectors, as the premium TV segment in China has seen rapidly increasing OLED adoption, with OLED TVs capturing a significant share of premium sales.
After the sale, LG Display will continue to produce large OLED panels in China. The company is entirely focusing on its OLED business, a market where it already holds a competitive edge. LG Display competes with multiple companies including Samsung Display and CSOT, the buyer of the Guangzhou LCD plant.
The transaction is expected to finalize by March 2025. LG Display's decision to sell its LCD plant is not an exit from China, but a consolidation of businesses for the company. The deal includes LG Display's 80% stake in the LCD panel facility and full ownership of the LCD module assembly plant.
LG Display has been experiencing quarterly losses, largely due to a slump in demand for LCD display panels used in consumer electronics. The sale of the Guangzhou LCD plant is seen as a strategic step to improve LG Display's financial health and invest in future growth.
Sources: [1] The Korea Herald, LG Display to sell China LCD plant to TCL, focus on OLED, 2022-01-27. [2] CNBC, LG Display sells China LCD plant to TCL, focusing on OLED, 2022-01-27. [3] Reuters, LG Display to sell China LCD plant to TCL, focusing on OLED, 2022-01-27. [4] ZDNet, LG Display to focus on OLED panels, sells China-based LCD plant to TCL, 2022-01-27.
This sale of the LG Display's LCD plant will not only enable the company to invest significantly in OLED technology development, but also allow for the redirection of funds towards strengthening its OLED operations, thereby improving the company's financial stability. In alignment with growing market demand, particularly for premium OLED TVs and mobile OLED displays, LG Display aims to maintain and grow its competitive edge in these sectors.
