Last June we noted that LG Chem (051910.KS) had agreed to sell much of its LCD polarizer business to China’s Ningbo Shanshan Co., Ltd (600884.CH), a chemical company based in Zhejiang Province and a provider of battery materials. At the time there was some confusion as to the price, which was originally quoted to be $1.1b US. After ~6 months of wrangling with the Korean government over the potential loss of important technology to a foreign power, it seems the Korean government has relented and approved the sale. While it seems that the asset value of the LG Chem LCD polarizer business was, at the time, $1.1b, the actual purchase price to be paid by Shanshan is ~$120m US for a 70% stake in the newly created JV between the two companies, with LG expected to reduce it stake in the JV over time.
LG Chem is retaining the portion of the polarizer business that is relevant to the automotive segment and will focus its development efforts on OLED and the sale is in keeping with the tact taken by South Korean panel producers Samsung Display and LG Display (LPL) who have been decreasing LCD capacity and converting plants to OLED as they face continuing pressure from Chinese panel producers. That said, as LCD panel prices have increased those plans have been postponed into 2021 as panel profitability has increased. With polarizers being a key component of LCD technology logic holds that local display component suppliers in China would like to control as much of the LCD supply chain as possible, while South Korean panel producers are using the opportunity to sell off those ancillary businesses that have been marginal or unprofitable in recent years.
LG Chem is retaining the portion of the polarizer business that is relevant to the automotive segment and will focus its development efforts on OLED and the sale is in keeping with the tact taken by South Korean panel producers Samsung Display and LG Display (LPL) who have been decreasing LCD capacity and converting plants to OLED as they face continuing pressure from Chinese panel producers. That said, as LCD panel prices have increased those plans have been postponed into 2021 as panel profitability has increased. With polarizers being a key component of LCD technology logic holds that local display component suppliers in China would like to control as much of the LCD supply chain as possible, while South Korean panel producers are using the opportunity to sell off those ancillary businesses that have been marginal or unprofitable in recent years.
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