LG Facing Dilemma Over Future OLED TV Production As Samsung Strips Share With Quantum Dot
Right now LG is tossing up whether to invest in a new A$5 Billion-dollar OLED manufacturing plant.
To do so they need the support of other manufacturers who at this stage are reluctant to support a technology that is costly to produce.
A litmus test of what could go wrong can be found in the history of plasma.
Billed as the next big thing in display technology plasma display screens like OLED display panels were costly to produce, they also had a high manufacturing failure rate.
And like LG OLED panels they were expensive with early plasma panels from the likes of Sony, Hitachi, Fujitsu, NEC, and Pioneer costing up to $20,000 for a 42″ display screen.
Very quickly the likes of Pioneer, Fujitsu, NEC and Hitachi, companies who had invested tens of millions in plasma plants got out of the plasma TV market after racking up billions in losses.
Eventually all key manufacturers dumped plasma in favour of LED, then LCD and now Ultra HD display technology.
LG Australia who are selling their 65″ top end OLED for $8,999 which is $1,959 more expensive than the same OLED TV being sold in the USA is desperate to grow their OLED TV share.
The only problem is that because of the small numbers involved the Company is being stopped by LG Korea from investing in brand marketing to educate consumers on the difference between the OLED that LG is offering and the cheaper Super Ultra High Definition technology being offered by the likes of Samsung, Sony, and Panasonic.
In fact, many consumers are struggling to spot the difference between what Samsung is offering as their premium display technology and LG’s expensive OLED TV Technology
Last week LG Display announced that they are looking to pour billions into a new OLED plant. Construction is set to commence in March 2016.
The announcement comes in the same week that LG Display declared a Q3 profit slide of 30 per cent as the result of weaker demand for consumer electronics devices.
LG Display, which counts Apple one of its major clients, has moved to shore up production of its flagship OLED, as well as quantum dot-based panels which is their protection if OLED falls over as a premium TV technology.
The LG OLED move, is an attempt to compete more effectively with the company’s bigger rival Samsung, which is pushing harder in the quantum dot TV sector which some say is an equal quality to OLED without the manufacturing risks.
The problem for LG is that they need to invest in a plant that is capable of producing both large, medium and small-sized OLED display panels and some analysts are saying that they don’t have the capital to do this without partners.
last month, LG Display started flattening the land for a plant which they claim can build Gen.11 Display.
Among those who turned up to inspect the location for the new plant were Samsung TV executives.
Key to whether LG stays with OLED and the production of multi sized panels is Apple who want OLED panels for their next iPhone.
China’s BOE has already announced its decision to invest in Gen 10.5 LCD panels a move which analysts claim leaves South Korean businesses with no choice but to also consider investing in large-sized LCD panels.
Korean media is claiming that LG Display does not have enough funds to actually carry out a full investment program for the new plant especially as sales of LG TV’s is falling.
Financial industries are estimating that funds and cashable assets that LG Display have will be about US$1.38 billion this year which is up from the US$765 million which was on their books last year.
The Korean media claim that LG Display lacks the capability to carry out any large-sized investment in OLED and new generation LED production facilities.
The Korean Herald said recently that ‘because investments in Gen.8 LCD facilities are progressing considerably in China, LG Display needs to examine how much profit it can gain from large-sized LCD hereafter. It is also necessary to invest in OLED if it wants to expand markets and increase gap between itself and China in technologies.
It’s estimated that the new plant if it goes ahead will take two years to complete.
Executive Director Lee Bang Soo of LG Display’s Management Support Group said when questioned about their strategy and why LG was starting construction of a display panel production plant without the full investment to finish the plant being in place he said.
“There was a similar incident in the past when we prepared land and built our P9 facility. This is an action taken to quickly respond to next-generation investment, and we are planning to vote on this matter during a board meeting that will take place at the end of this month.”
He added “However it is still premature to decide on detailed direction of investment in next-generation facility during this board meeting.”