LG Display Weighs on Whether It Should Invest Gen.11 Display at Its P10 Facility

LG Display is thinking deeply about what its next investment should be towards with new ‘P10’ Production Facility on the line. Although it needs to invest in all of medium and small-sized OLEDs, large-sized OLEDs for TVs, and large-sized LEDs, there is a lot of financial burden in investments.

In last month, LG Display has started to make land leveled so that it can build Paju P10 Facility, which has wide land that can produce Gen.11 Display. When it started construction, even people associated with Samsung Electronics came to visit the site because industries want to know which panels will LG Display produce as it starts investing in next-generation display facilities.

LG Display is planning to finish its beginning stage of construction by March of 2016 and start constructing the building.

At that time industries came to a conclusion that LG Display is trying to expand supplies of medium and small-sized panels with P10 because it interlinks with current situation where Apple is discussing with LG Display, Samsung Display, and JOLED about supplying OLED panels for next iPhone. They were persuaded by a conclusion that new facility will supply panels for Apple.

However there is a high chance that LG Display built the land a size of huge Gen. 11 line because it wants to start investing in large-sized LCDs. China’s BOE already announced about its decision to invest in Gen 10.5, and there is a rumor that CSOT is always considering about investing in Gen. 11 LCD. This leaves South Korean businesses no choice but to also consider about investing in large-sized LCDs. Fact that there are still half of unused space at P9 and that LG Display is preparing for large-sized land that can have large-sized facilities increase the chance of LG Display investing in large-sized LCDs.

Scene of construction of LG Display’s P10 in Paju on the 17th at night. Although it is still dark since sun is set, construction workers are still busy labeling the site.

A scenario where LG Display is planning about expanding OLED TV markets by preparing Gen. 8 or higher OLED production lines at P10 is also being brought up.

However LG Display does not have enough funds to actually carry out all of investments and that is why it needs accurate choice and focus. Financial industries are estimating that funds and cashable assets that LG Display have will be about $1.38 billion (1.6 trillion KRW) this year from $765 million (890 billion KRW) from last year. Although it is optimistic that its debt ratio decreased from 94.9% last year to $86% this year, changes are inevitable once it starts investing huge amount of money in facilities. In overall it lacks conditions to carry out large-sized investment in facilities.

LG Display has yet to decide on detailed direction that it will take with next-generation facility. Because investments in Gen.8 LCD facilities are progressing considerably in China, it 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.

Due to these reasons, it is currently constructing P10 at a size that can accommodate up to Gen. 11 while considering many ways of investments. This is done so that even if it does not decide on P10’s use immediately, it can prepare for production of products by quickly stocking equipment when decision of investment is made after facilities are completed.

If LG Display does not decide on production items and prepare land and a building, it can minimize time of investments by about a year. Considering a fact that it takes about more than 2 years to prepare land, establish facilities, invest and arrange facilities, operate lines, and secure yield from mass-production, it can reduce a time that takes during pre-process before investments by half.

“There was also a similar incident in the past when we prepared land and built P9 facility, then decided on detailed size of investment. 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.” said Executive Director Lee Bang Soo of LG Display’s Management Support Group. “However it is still premature to decide on detailed direction of investment in next-generation facility during this board meeting.”

Staff Reporter Bae, Okjin | [email protected]