LG Display Posts Q1 Profit Surge on OLED Shipments, Seeks Higher Margins with Tandem Technology
Comparison of an OLED TV panel that emits light at the pixel level (right) and an LCD TV panel that uses local dimming at the block level. (Photo provided by LG Display)
Chinese Rivals Korean display makers are accelerating a shift toward high-value-added organic light-emitting diode (OLED) products to counter China’s volume offensive. Samsung Display and LG Display have moved to defend their market leadership through super-gap technologies and large-scale facility investment.
According to industry sources on April 28, LG Display posted first-quarter consolidated revenue of 5.5340 trillion won ($3.81 billion) and operating profit of 146.7 billion won ($101 million). Despite the seasonal off-season, operating profit surged 338% from a year earlier on expanded shipments of high-value OLED products, marking a third consecutive quarter in the black.
The improvement was driven by the introduction of cost-cutting technologies, operational efficiency gains, and a reorganization of its business portfolio around strategic customers. OLED’s share of total revenue expanded to 60%, while average selling price per area rose 55%.
To sustain the profitability improvement trend, LG Display plans to boost margins based on tandem OLED technology and raise the share of fast-growing monitor OLED products from the low-10% range last year to 20% this year. It will also invest 1.1060 trillion won ($761 million) to build new-technology infrastructure at its Paju plant.
The company also obtained verification of “100% luminance retention rate” for large-sized OLED panels. It demonstrated its technological capabilities by implementing a peak luminance of 4500 nits and an ultra-low reflectance rate of 0.3% through pixel-level light-emitting technology. Still, first-quarter net loss for the period of 570.7 billion won ($393 million) due to the strong won-dollar exchange rate and one-off costs including voluntary retirement in the second quarter are seen as short-term financial burdens.
Samsung Display is focusing on mass production of 8.6-generation OLED for IT devices, backed by a total investment of 4.1000 trillion won ($2.82 billion). The 8.6-generation line, being built with capacity of 15,000 sheets per month, uses glass substrates 2.25 times larger than those of existing 6-generation lines, improving cost efficiency and production productivity. It is recently known to have surpassed an 80% yield rate.
Earlier, in January, it became the first in the industry to ship paid samples of 8.6-generation products to customers. It plans to begin full-scale mass production as early as June-July and supply panels for products including Apple MacBooks scheduled for release next year, with the aim of decisively widening the gap with Chinese rivals.
It also completed “Quantum View” certification for all QD-OLED products for TVs and monitors, proving overwhelming picture quality by maintaining more than 60% of front-view brightness even at a 60-degree side viewing angle.
According to market research firm Omdia, global OLED monitor panel shipments this year are expected to reach 5.4 million units, up about 60% from a year earlier. Although volumes are lower than for smartphone panels, their higher unit prices have made them a core profit source for the display industry. The government is also helping finance facility investment by including “securing a super gap in OLED” in the second mega project of the 150 trillion won ($103.15 billion) National Growth Fund.
The move is interpreted as a response aimed at fending off aggressive advances by Chinese companies. According to Counterpoint Research, concerns are growing that Chinese OLED production capacity will surpass that of South Korea from 2029. In fact, major Chinese companies, including BOE and CSOT, are moving to capture market share with more than 80 trillion won ($55.02 billion) in investment and government subsidies behind them. The latest fund creation is expected to help domestic companies defend market dominance amid the pursuit by Chinese rivals.
In response, the domestic industry is countering with super-gap technological capabilities. Kim Sung-hyun, chief financial officer of LG Display, previously stressed, “Even amid uncertainty in the external environment, competitiveness in high-specification products is strengthening and technological barriers are rising,” adding, “Through technological differentiation, we will secure financial soundness and achieve sustainable results.”
Kim Eun-jin
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