“No profit” for LG’s display division
October 25, 2018
LG makes the best panels for OLED manufacturers, and there is no doubt that their ‘best of breed’ quality is appealing for their own branded displays as well as those of its retail rivals.
But according to analysis by Bob Raikes of Display Daily the South Korean electronics giant is some way off from making a consistent profit, and recently its profitability has “dived” and the division is heading “for a negative (and possibly prolonged) period” of bad news.
Raikes used data from DSCC’s Quarterly Advanced Display Cost Report, which indicates that the three quarter-years (from Q4/2017) to mid-2018 have been in negative territory as far as operating profit has been concerned. But the decline started at the beginning of last year (when it was touching 15 per cent operating profit margin) but that has steadily slipped over the past 18 months.
Raikes said: “The main issue for LG has been cost. Although it has often described the technology it uses (white OLED with a colour filter) as ‘simple’, the reality is that there is no White OLED material – the white is created from red, green and two blue layers which combine to create white. Each of those emissive layers needs supporting layers, so the sandwich of the OLED is actually composed of 22 layers. These are basically ‘simple’ layers, but still a small defect in any of the layers can cause a panel to have to be rejected, so careful process control is needed. The vapour deposition process is quite wasteful of expensive OLED materials, which is why OLED makers are looking at inkjet printing, to save cost.”
He added that turning these losses around will mean higher prices, but overall LG Display will be helped by ending a depreciation charge on one of its fabrication plants at the end of this year, and LG is further aided by lower costs of Integrated Circuits and other key components.
LG Display is also developing a new (Generation 8.5) plant in Guangzhou, China, which will trim costs.