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LCD price hikes

LG Display set to turn profitable as LCD shortage boosts prices

By Apr 23, 2021 (Gmt+09:00)

LG Display's rollable OLED
LG Display's rollable OLED

LG Display Co., a major South Korean display panel maker, has been in the red for years, weighed by subdued panel prices amid a supply glut caused by Chinese manufacturers’ mass production.

But the company is widely expected to swing to a handsome profit this year as the prices of liquid crystal display (LCD) panels are rising fast on increased demand from makers of electronic devices.

Such a demand is so high that PC makers such as Dell, HP and Lenovo can receive only half the orders they place with panel suppliers, says KB Securities analyst Kim Dong-won.

“There’s a bottleneck in the supply chain with growing panel requests,” said Kim. “LCD prices will keep rising throughout the year.”

He expects the panel prices for TVs to increase 50% this year from 2020 while those for PCs will rise more than 40%.

According to equities market tracker FnGuide, LG Display is forecast to post 1.7 trillion won ($1.52 billion) in operating profit this year, a significant turnaround from a loss of 29.1 billion won in 2020 and a shortfall of 1.36 trillion won in 2019. Most of the company’s profit will likely come from its LCD business, the research firm said.

SHARES SURGE ON BRIGHT OUTLOOK

Investors are snapping up LG Display’s shares on the rosy business outlook.

The stock is trading at a near three-year high of 27,200 won in late Friday, up 3% from the previous session. The stock has risen 47% so far this year.

Since South Korea’s two panel makers, Samsung Display Co. and LG Display, drastically reduced their exposure in the low-margin TV LCD market last year, Chinese manufacturers led by BOE and CSOT have filled the void, churning out panels in large quantities, which in turn drove down prices.

LG Display's transparent OLED
LG Display's transparent OLED

Panel prices, however, have risen again on a surge in worldwide demand for TVs and monitors from people working and learning remotely in the COVID-19 pandemic era.

The price of a 55-inch LCD TV panel has increased to $215 this month, the highest in nearly six-and-a-half years, according to market research firm WitzView.

NARROWED PRICE GAP WITH HIGH-END OLEDs

A rapid increase in LCD panel prices has almost caught up with the prices of higher-end organic light-emitting diode (OLED) displays. LG Display is the world’s largest OLED TV panel manufacturer.

The recent shortage of LCD panels is due to an insufficient supply of display driver integrated circuit (DDIC) chips and glass substrates, two key components used to make display modules.

US-based Corning Inc. that makes such glass substrates, Taiwan’s Novatek Microelectronics that designs DDIC chips, and chipmaker TSMC have all cut their production since the outbreak of the pandemic, creating a shortage in the display market.

In February this year, LG Display invested $750 million in its display plant in Vietnam to expand production facilities.

At its Hai Phong factory, LG Display assembles OLED modules by combining panels with DDIC chips and related components for use in TVs and smartphones.

Write to Jae-Yeon Ko at yeon@hankyung.com

In-Soo Nam edited this article.

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