LG Display smashed LCD and actively transformed into an OLED factory. LG Display's (LDG) stock has evaporated 41 percent year-to-date and is currently positive Transformed into an OLED factory.
In front of more than 1,000 employees, Han Sang-beom, CEO of LG Display (LGD), put on goggles and picked up a hammer to smash LCD, the company's main product for many years, symbolizing its determination to transform an OLED factory.
LG Display đã đánh giá sai tình hình thị trường và gây ra khủng hoảng doanh nghiệp
Since Han Xiangfan took over in 2012, LG Display has received large orders for mobile phones and TV screens from Apple and LG Electronics for five consecutive years. However, during the period when Chinese rivals rose, BOE invested heavily in LCD panels and stormed the market at low prices. The market advantage has gradually disappeared.
"LG Display made a major mistake in its LCD business expectations and did not accurately analyze the timing of China's rapid overtaking in the early days," said Lee Won-sik, an analyst at Shinyoung Securities.
In the face of the rising panel production capacity in China, the oversupply of LCD products, and the squeeze on prices and profit margins, LG Display announced in July this year when it released its second-quarter earnings report, an operating loss of nearly 202.1 million US dollars, and it is expected to reduce capital expenditures.
Samsung withdrew from the LCD market competition early, and began to close the Korean production line in 2010, but LG Display realized that it only started to cut LCD production last year, removed 3 production lines, and abandoned the new production line plan.
An LG Display employee admitted: "We knew LCD prices would drop last year, but we didn't expect such a sharp drop, customers kept asking for price cuts, but we didn't act immediately until it was too late. "
LCD even scaled back cash flow spending due to heavy losses in 2018. According to data from Eikon, LGD's cash flow has problems, with a negative value of 83.82 billion won (about 740 million US dollars) in the second quarter, the third consecutive quarter of negative value.
In April, the company launched an "emergency management system" that requires employees to use cheaper flights and reduce meal allowances.
LG Display tích cực chuyển đổi thành nhà máy sản xuất OLED
LG Display said it will invest 17.6 billion in OLEDs over the next three years and expects the OLED division to be profitable in the third quarter, and will be able to profit from older technology as LCD prices stabilize until the new technology matures .
LG Display internal employees revealed that given that OLED is the solution to the company's crisis, there is no other way than tightening the belt and developing OLED.
Earlier Korean media reported that LG Display has become Apple's second largest panel supplier for this year's new iPhone products, and will soon provide LCD and OLED panel products.
Analysts believe LG Display's earnings could turn around as OLED becomes more popular.
LG Display placed all its bets on OLED, but the company started late, and in the future will face a situation where China, Japan and South Korea are surrounded by strong enemies such as Samsung Display, BOE, JDI and Sharp.
