LG Display to diversify its production base to Vietnam Korean display maker to inject $1.4 bil in Vietnamese OLED module factory

Translated by Kim So-in 공개 2021-09-15 08:05:23

이 기사는 2021년 09월 15일 07:56 더벨 유료페이지에 표출된 기사입니다.

LG Display is moving its production base to countries like Vietnam to widen the technological gap with Chinese companies' small- and large-sized organic light emitting diode (OLED) displays. The company concerns that it may lose their competitive edge in OLED technology, which is what happened with liquid crystal displays (LCD).

The local government of Haiphong, a port city in northeastern Vietnam, gave a nod to the Korean display maker’s plan to invest $1.4 billion (1.64 trillion won) to expand production capacity at its OLED module factory in Vietnam, according to industry sources on Monday. Including its $750 million investment in the module factory there in February, LG Display has invested around 2.5 trillion won in Vietnam so far this year.

“The timing of the 1.6 trillion won investment has not been finalized yet,” said an official at LG Display. “It is part of our strategy to diversify our OLED production base.”

The Korean display maker’s latest investment decision is in line with its strategies to avoid concentrating OLED production bases in one particular region in China. BOE Technology, China’s largest display maker, overtook Korea’s LG Display and Samsung Display as the world’s top display maker as the Chinese firm acquired technological skills by absorbing a lot of manpower from domestic LCD company Hyundai Electronics.

China is also aiming to lead the OLED market. Although OLED technology is more difficult to copy compared to LCD and requires a lot of skills, technology leakage will likely be inevitable in the longer term due to turnover of technicians.

For large-sized OLED displays, Chinese players are years behind in technology, but they could catch up with Korean firms in less than a year for small-sized OLED displays used in smartphones. The key to the success of OLED is to widen the production capacity gap with Chinese firms as much as possible.

LG Display has chosen Haiphong as its new production base after Guangzhou, China, since 2016, but had to continue investing mainly in China as its Haiphong factory has made losses. LG Display’s Haiphong factory assembles OLED panel modules for both smartphone and TV screens. It uses OLED panels produced at its Paju and Gumi plants in Korea and Guangzhou plant in China.

Last year, the Haiphong factory swung to a profit of 164.5 billion won and LG Display is actively investing in the country to further increase the production capacity. LG Display plans to bump up OLED panel output at its Haiphong factory to 13 million-14 million units per month from current nine million units.

The company has sharply increased its capital expenditure target from last year’s more than 2.5 trillion won, bearing its investment in Vietnam in mind. LG Display aims to spend around 4.5 trillion won on capital expenditure this year, which is highly likely to be achieved if it expands its Vietnamese production base within this year.

LG Display recently announced that it will add a new line for OLED panels in Paju by investing 3.3 trillion won over the next three years, of which the largest amount is likely to be executed this year. (Reporting by Hyun-ji Sohn)
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