LG seen to reduce losses this year

24-Jun-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

Lockdowns that have been in place across the globe have brought economic activity to a virtual standstill, and yet some positive flow-on impact is expected for the display industry as more people work from home, raising demand for plastic-based OLED displays in handheld devices and idling demand for OLED TVs.

LG Display has been going through large-scale structural reforms at “zero base,” including its decision to end production of conventional LCDs and to hugely cut its planned capital expenditures by at least 10 percent this year due to the massive influx of cheap Chinese displays amid the pandemic.

Given LG’s heavy presence in LCDs for use in large-sized TV sets and the continued supply glut, there is no question that LG Display, once the global industry leader, will end this year with heavy losses.

But the group’s display affiliate is already minimising expected losses for this year as the spread of COVID-19 forced consumers to stay home, resulting in more purchases of IT products such as laptop computers, monitors and tablets.

“Demand for such portable devices is surging thanks to the emerging work-from-home trend and online education amid the pandemic,” an official at LG told The Korea Times, Tuesday, adding LG has been quick to respond to the trend by actively readjusting its product portfolio to focus on value-added IT panels. The output of displays for use in notebook and monitor products in May by LG saw double-digit growth year-on-year.

While it’s true the overall demand for consumer electronics is weak, rising display prices for laptops, tablets and smartphones are helping LG limit its drop in profits.

“Major technology companies are increasing inventory in home tech products such as laptops and tablets. Panel makers are busy manufacturing displays used in such IT products amid the pandemic,” an LG official said, adding LG is considering shifting its TV display lines toward manufacturing displays for such devices.

The quickest way for LG Display to better counter the impact of crashing TV screen prices could come through substantial orders for its small OLED panels to be used in Apple’s new iPhone models, as LG is one of the top display suppliers for the Cupertino-based company.

Regarding any updates about Apple’s growing calls to install LG’s plastic-based OLED panels in Apple’s upcoming iPhones, LG said it can’t comment on client issues, though reports and industry officials said Apple asked LG Display to supply LCDs for use in iPads “as quickly as possible.” Apple was said to have adopted LG’s 10.8-inch LCDs for its upcoming iPads, which will be released in the latter half of this year.

A senior executive in the display industry said LG Display is set to report lower-than-expected operating losses throughout this year. “Coupled with massive cost-cutting efforts and the rising demand for IT products amid the pandemic with the firm winning more LCD orders from Apple, the amount of LG’s losses this year will be lower than expected,” the executive said by telephone.

Omdia, a market research firm, expects LG’s global share in the monitor LCD segment to rise to 22.6 percent by the end of the second quarter from 21.2 percent a quarter earlier, while that in the laptop LCD segment is anticipated to expand 16.4 percent from 14.4 percent during the same period.



Category: Korea

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