LG Display Relying On Its Chinese Factory To Overcome Japan’s Export Restrictions

While the Korean display industry has been put on alert by Japan’s trade retaliation measures, LG Display is seeking to overcome them by starting volume production of 8.5th-generation OLED panels at its plant in Guangzhou, China. Unlike its plants in Korea which are expected to suffer production disruptions due to problems in securing Japanese material and parts, its factory in Guangzhou will not be affected by Japan’s export restrictions. If the volume production is fully stabilized in early August, supply of OLED TV panels will likely shoot up.

“Since the Chinese factory is procuring display parts locally, it is free from Japan’s export regulations,” an LG Display official said on July 7. “We are continuing a test operation of the Guangzhou plant because it is scheduled to start mass production in August. Since we have experience in producing 8th-generation products in factories in Korea, we will not have any problem in the operation of the Guangzhou factory.”

When the Guangzhou OLED line goes into operation, LG Display’s annual production of large-sized OLED displays will also soar from 2.90 million units last year to 3.8 million units this year. “The operation of the Guangzhou plant will boost the production of glass substrates from 70,000 units per month to 130,000 to 160,000 units per month,” the official said.

Based on this, LG Display plans to quickly shift its sales focus from LCD panels to OLED panels. The display giant expects OLED sales to account for more than 30 percent of its total TV panel sales this year. LG Display plans to scale up its large-size OLED panel production to seven million units next year and 10 million units by 2021.

LG Display is expected to boost productivity by applying multi-model glass (MMG) technology for the first time to the Guangzhou OLED production line. MMG technology cuts panels into various sizes and minimizes discarded parts. Currently, LG Display manufactures three 65-inch OLED panels and two 77-inch OLED panels with one original plate, but MMG technology will allow the company to produce panels additionally, helping it cut production costs by up to 10 percent to 20 percent.

There is a concern that the yield may fall for some products when MMG technology is applied, but industry experts say that the company is not expected to face any problem in the long term. “Yields are not exactly known as they are business secrets of panel companies. The initial yield may be low when the Guangzhou plant goes live, but LG will be able to attain a desired yield of 80 percent thanks to its rich experience in panel production,” an industry observer said.―Business Korea

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