Commitment
LG Display (LPL) has gone from a company mired in financial issues to one ready to expand and compete. With the sale of the company’s Guangzhou, China Gen 8.5 LCD fab, and the recent advanced payoff of a short-term loan from parent LG Electronics (066570.KS), the company has now made two substantial spending commitments over the last few weeks, although with few details.
The first was a 700b won ($442.8m US) equipment spending plan for the company’s Paju, South Korea production campus, which we believe was made in response to a number of clarification queries from the Korean stock exchange fostered by investor rumors. While OLED was specified, which was not a surprise, there were no specific details given as to the technologies or production focus other than roughly half will be spent on front-end processes and half on back-end. It was noted in the press that the company had plans to sign an MOU with the Gyeonggi provincial government and the local Paju City government that would give the company subsidies and tax reductions (up to 50 billion won or $31.6m US) as a benefit for eliminating overseas production and relocating it back to South Korea.
Here's what the company said:
We are reorganizing our portfolio to focus on OLED, which can secure profitability and enable technological differentiation, and are promoting the advancement of our business structure. We are reviewing various measures to continuously expand management performance and strengthen mid- to long-term business competitiveness, but there are no specific confirmed matters or decisions regarding the investments reported in the media as of now.
Yesterday the board authorized what seems to be another spending plan, this one for 1.26 trillion won ($797m US), or 15.6% of the company’s equity capital between today and the end of June in 2027, although dates are subject to change. Here’s what they said yesterday:
We are securing future technology competitiveness through timely preparation for new OLED technologies and infrastructure investment. Detailed matters necessary for the execution of this investment have been delegated to the company’s CEO.
We do not know yet whether these two investments are concurrent or independent of each other and certainly were given no hint as to the spending direction, although we suspect that the 700b won earlier announcement is part of the larger sum. However, there are a number of OLED technology points that might be considered. LG Display has been producing tandem (dual OLED stack) displays commercially since 2019, and while they have not mentioned plans for a dedicated IT OLED fab that would be producing such panels, as has Samsung Display (pvt) and BOE (200725.CH), they have been able to directly compete with South Korean rival Samsung Display, who started commercial dual-stack OLED display production in 2022 and has been trying to catch up to LGD. While the idea of a more efficient Gen 8.6 OLED for IT fab is a sound one, LG Display seems able to meet Apple’s (AAPL) quality and volume demands on its current Gen 6 OLED lines, and the risk comparison of building out add-on Gen 6 OLED small panel capacity is less than a commitment to a new Gen 8.6 OLED fab. Given LG Display’s recent financial issues, we would expect them to take the safer path.
Micro-OLED is another potential source of spending, especially in anticipation of a lower cost XR device to compete with Meta’s (FB) Ray-Ban and similar AR offerings. A bit more risky than OLED for IT, but a smaller capital commitment. Last on the spending list would be an increase in large panel OLED production. While growing, the OLED TV space has faced considerable competition from Mini-LED/QD TV sets and also faces competition from Samsung Display’s QD/OLED TV category, but an additional line that can produce both large panel WOLED TV panels and some smaller WOLED monitor panels might still be considered.
It seems the LG Display board has put the specifics in the hands of the company’s current CEO Chuldong Jeong, who has been the CEO for a bit over one year and is credited with turning the company back into a profitable entity. Now that the capital has been approved, it will be up to him to decide how to allocate, and likely will determine the company’s future for the next 5 or 6 years. He makes ~$1m US in salary and receives no bonus or options (at this time). Lots of pressure for not so much compensation…
The first was a 700b won ($442.8m US) equipment spending plan for the company’s Paju, South Korea production campus, which we believe was made in response to a number of clarification queries from the Korean stock exchange fostered by investor rumors. While OLED was specified, which was not a surprise, there were no specific details given as to the technologies or production focus other than roughly half will be spent on front-end processes and half on back-end. It was noted in the press that the company had plans to sign an MOU with the Gyeonggi provincial government and the local Paju City government that would give the company subsidies and tax reductions (up to 50 billion won or $31.6m US) as a benefit for eliminating overseas production and relocating it back to South Korea.
Here's what the company said:
We are reorganizing our portfolio to focus on OLED, which can secure profitability and enable technological differentiation, and are promoting the advancement of our business structure. We are reviewing various measures to continuously expand management performance and strengthen mid- to long-term business competitiveness, but there are no specific confirmed matters or decisions regarding the investments reported in the media as of now.
Yesterday the board authorized what seems to be another spending plan, this one for 1.26 trillion won ($797m US), or 15.6% of the company’s equity capital between today and the end of June in 2027, although dates are subject to change. Here’s what they said yesterday:
We are securing future technology competitiveness through timely preparation for new OLED technologies and infrastructure investment. Detailed matters necessary for the execution of this investment have been delegated to the company’s CEO.
We do not know yet whether these two investments are concurrent or independent of each other and certainly were given no hint as to the spending direction, although we suspect that the 700b won earlier announcement is part of the larger sum. However, there are a number of OLED technology points that might be considered. LG Display has been producing tandem (dual OLED stack) displays commercially since 2019, and while they have not mentioned plans for a dedicated IT OLED fab that would be producing such panels, as has Samsung Display (pvt) and BOE (200725.CH), they have been able to directly compete with South Korean rival Samsung Display, who started commercial dual-stack OLED display production in 2022 and has been trying to catch up to LGD. While the idea of a more efficient Gen 8.6 OLED for IT fab is a sound one, LG Display seems able to meet Apple’s (AAPL) quality and volume demands on its current Gen 6 OLED lines, and the risk comparison of building out add-on Gen 6 OLED small panel capacity is less than a commitment to a new Gen 8.6 OLED fab. Given LG Display’s recent financial issues, we would expect them to take the safer path.
Micro-OLED is another potential source of spending, especially in anticipation of a lower cost XR device to compete with Meta’s (FB) Ray-Ban and similar AR offerings. A bit more risky than OLED for IT, but a smaller capital commitment. Last on the spending list would be an increase in large panel OLED production. While growing, the OLED TV space has faced considerable competition from Mini-LED/QD TV sets and also faces competition from Samsung Display’s QD/OLED TV category, but an additional line that can produce both large panel WOLED TV panels and some smaller WOLED monitor panels might still be considered.
It seems the LG Display board has put the specifics in the hands of the company’s current CEO Chuldong Jeong, who has been the CEO for a bit over one year and is credited with turning the company back into a profitable entity. Now that the capital has been approved, it will be up to him to decide how to allocate, and likely will determine the company’s future for the next 5 or 6 years. He makes ~$1m US in salary and receives no bonus or options (at this time). Lots of pressure for not so much compensation…
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