lg display struggles for footing after lcd forecasting error leads to crisis
Yang Park and Heekyong, Seoul (Reuters)-
South Korea\'s chief executive of LG Display , Han Sang-
Beom, who appeared in front of 1,000 employees at the company\'s main manufacturing plant last spring, was determined to send a strong message.
So he put on a pair of goggles, picked up the hammer and broke a liquid --
This symbolism must not be missed: LCD panels, which have been the backbone of the company for many years, are now thrown into industrial bins.
The future of the company will depend on newer technologies, organic light-
LEDs or OLED.
\"I have never seen him do such a thing,\" said a company official present . \".
\"His performance shows a serious determination to survive this crisis.
\"However, LG Display\'s dilemma is caused by itself in many ways.
Less than a year ago, due to the company\'s leadership in television, computer monitors and smartphone LCD screens, the company paid additional allowances and bonuses to its employees.
But LG Display misinterpreted the market: China\'s competitors were strong and prices for LCD screens plunged by the beginning of this year.
The huge profits of 2017 turned into huge losses in 2018.
The company suddenly announced on July that it would cut $2.
As at 2020, the planned capital expenditure was EUR 7 billion.
According to Eikon data, the company did not disclose its full or previous target, but the capital expenditure in 2017 was about $6 billion.
The company\'s dilemma is a clear example of the risks inherent in a highly competitive technology enterprise that requires a lot of capital investment.
\"LG Display seems to have made a major mistake in its LCD business, and when they see a fast catch-up in China, there is no accurate judgment on the time of exit
\"Come on,\" Li said.
Sik, analyst at Shinyang Securities.
An LG Display official admitted: \"We have known since last year that LCD prices will decline, but we didn\'t expect such a rapid decline . \" He, like everyone else in this article, declined to be named because he was not authorized to talk to the media.
\"Customers have been asking for price cuts, but we didn\'t take action until it was too late. Free price
FALLLG Display made strong profits for five consecutive years after Han took office in 2012, with Apple Inc . ) the demand for LCD screen orders and LG Electronics (LG Electronics) , it has more than a third monitormaker.
LG Display has also begun investing in OLED displays, which, unlike LCD screens, do not require backlighting and offer more natural effects. looking colors.
The OLED screen also consumes less energy and can be bent and folded.
But the technology is expensive, and most of LG Display\'s revenue comes from LCD monitors.
Until the recent cuts, it also operates eight LCD production lines in South Korea and China.
Although LG display all the way down, but the Chinese company headed by BOE Technology Group Co. , Ltd. is still under 000725.
SZ>, invested a huge amount of money into LCD production.
By January 2017, BoE had become the first in the world.
According to market-tracking firm IHS Markit, LCDs has more than 9 inch suppliers, accounting for 22.
Unit shipments of 3% to 21.
LG Display 6%.
This is the first time that Chinese display manufacturers have topped the list.
By the beginning of 2018, prices for many types of LCD monitors were freefall. Prices for 50-
For example, according to IHS Markit, LCD TV panels in August fell 32% from the same period last year.
LG Display is South Korea\'s biggest competitor, with Samsung Electronics\'s Display unit began to exit the LCD as early as a few years ago and shut down the old LCD production line in South Korea from 2010.
The company currently has only two LCD factories in South Korea and only one in China.
But the LG Display was flat.
The LCD capacity is now being frantically cut.
It has shut down three LCD production lines since last year and has abandoned plans for a new one.
The company also launched an \"emergency management system\" in April, and employees were told to use cheaper flights and reduce group meals, the company sources told Reuters.
Cash flows are negative 838, which has become a concern. 2 billion won ($743. 93 million)
According to Eikon, the second quarter was negative for three consecutive quarters.
Sources at the three companies said the company had no plans to cut jobs because of concerns about the brain drain to China, but some employees were frustrated by the cuts.
\"Executives are trying to keep morale up and it is wrong to tell US media reports about voluntary layoffs,\" said a company source familiar with the matter . \".
Change the rules of the game?
LG Display now puts the House on OLED and says it can pay $17.
OLED investment of 6 billion over the next three years.
The company expects revenue from the new technology to grow to 40% by 2020 from 10% today.
Analysts say the fate of LG Display may change with the popularity of OLED.
LG Display\'s OLED panels help its brother, LG Electronics, lead the way in high-end ElectronicsTerminal TV.
Some analysts believe LG Display has been forced to supply these panels cheaply, damaging its profitability, although the company denies it is.
But the OLED market will be very grim.
Samsung has been investing in OLED since 2005.
The Bank of England will also enter the OLED market.
LG Display offers expensive craftsmanship for durable OLED TVs, but there is no better option, said Ross Young, chief executive of research provider\'s monitor supply chain consultancy.
\"LG Display\'s current approach is the best solution in the market,\" Young said . \". Son Young-
On June, the vice president of public relations at LG Display said in a statement that the company is the only major electronics producer
The size OLED display has \"unparalleled technical expertise\" in OLED \".
\"The potential and prospects for the future are promising,\" he said . \"
LG Display says its OLED unit will make a profit in the third quarter.
The company also expects the price of LCD monitors to stabilize, enabling it to make profits from old technologies until the new technology matures.
\"Given that OLED is our answer and solution to the crisis, we have no choice but to tighten our belts and drive OLED,\" said a company official . \". Picture: by Ju-
The park and Yang Heqing;
Edited by Jonathan Webb and Gerry Doyle)