BOE and TCL enter the fray! Who will acquire LGD's Guangzhou factory?

According to The Korea Herald, negotiations are underway to exit the LCD business.The display manufacturer is considering options to sell its LCD assets, including the manufacturing plant located in Guangzhou, China.

LG Display and Samsung were once dominant players in the LCD panel market, but in recent years both Korean companies have focused on the more advanced (and potentially profitable) OLED market.

Fierce competition from Chinese LCD panel manufacturers has led companies in other regions to shift towards more advanced OLED panels. In 2021, Samsung sold its LCD panel manufacturing plant in Suzhou, China, to TCL for $1.08 billion.

LG Display ceased LCD panel production in South Korea in 2022. It is reported that the company will continue to take measures to restructure and optimize its business portfolio, and closing its less profitable LCD production facilities may help.

According to data from the Korea Display Industry Association, Korean companies maintain a strong competitive advantage in the OLED market, accounting for 74.2% of global OLED sales in 2023.

By focusing solely on large-size OLED panels for TVs and other applications, Korean companies accounted for 96.1% of global sales in 2023. This March, LG Display disclosed that it is exploring how to handle its LCD facilities in Guangzhou and other regions.

The company stated in its filing that it is currently reviewing various options for the strategic use of its LCD assets, including the manufacturing plant in Guangzhou, but no decisions have been made yet.

Reportedly, potential buyers include China's largest display company BOE, TCL's display subsidiary (CSOT), and Chinese home appliance manufacturer Skyworth . It is understood that 4-5 entities, including these companies and financial investors, have submitted letters of intent to LG Display.

Industry insiders say that LG is discussing this issue with the Ministry of Trade, Industry and Energy of South Korea. A valuable display factory, even if it may not be as profitable as LG Display's OLED production facilities, is considered one of South Korea's strategic assets.

Data shows that in 2023, in the large-size LCD market, BOE held a market share of 32.3%, TCL CSOT held 17.4%, LGD held 11%, and Innolux, AU Optronics, and HKC Corporation held market shares of 9.6%, 9.6%, and 9.2% respectively.

South Korean media and industry experts predict that the sale of LGD's Guangzhou factory will be completed in the third quarter of this year, mainly because it urgently needs to reverse its deficit situation and accelerate the acquisition of investment funds to prepare for launching the G8.X OLED panel production line investment plan for IT products.Initially, the sale scale of the Guangzhou LCD factory was expected to be around 1 trillion Korean won, but as the acquisition fever heats up, it could rise to nearly 2 trillion Korean won.

LGD officially disclosed in an announcement that further information regarding the LGD Guangzhou factory would be announced again on June 19, 2024.

Source materials: Display Frontier, DaotiIndustry Overview, OFweek Display comprehensive compilation