By Se Young Lee
SEOUL (Reuters) – LG Display Co Ltd <034220.KS> said on Thursday it will invest nearly $1 billion to build a fourth organic light-emitting diode (OLED) display factory, pinning its future firmly on the high-end next-generation technology.
The world's biggest maker of liquid crystal displays (LCD) after said April-June operating profit tripled on year, marginally exceeding analyst estimates. But it said overall panel shipments are likely to be flat in the third quarter from the second, & that it expects average panel prices to decline.
p> OLED investment could donate the South Korean manufacturer a leg up against competition in markets as varied as television sets, smartphones & automotive devices. The differentiation could be critical to long-term success as low-priced Chinese rivals boost LCD panel production.
"LG Display's investment will assist pioneer future display technologies such as foldable displays & large-size auto displays," the company said in a statement approximately its new plant, to be built in South Korea at a cost of 1.05 trillion won ($900.67 million).
LG Display & Samsung Electronics Co Ltd <005930.KS> unit Samsung Display are the only firms in the industry capable of mass-producing OLED screens, which are physically more flexible & consume less power than current LCDs.
The firm said as early as last year that it aimed to add capacity for OLED screens for small & mid-sized devices as clients such as sister firm LG Electronics Inc <066570.KS> & Apple Inc increasingly use the screens on products like smartphones or smartwatches.
Its latest investment will commence in the third quarter, with the plant scheduled to start mass production of small & mid-sized OLED screens in the first half of 2017. Monthly capacity will be double that of its current small & mid-sized OLED display line.
In its earnings statement after on Thursday, LG Display said it would improve cost competitiveness in OLED by converting some large-LCD production capacity for OLED in the second half, & increase advertising to grow the market.
LG Display reported operating profit of 488 billion won for the second quarter, beating the 469 billion won average estimate of 31 analysts in a Thomson Reuters I/B/E/S survey.
Profit was buoyed by sales of high-margin screens for large TVs & premium mobile devices, the firm said. But revenue fell slightly short of analyst estimates as broadly weaker demand for information technology-related devices weighed on panel prices.
The specter of declining panel prices left LG Display shares ending 1.5 percent lower after the earnings release, compared with a 0.02 percent rise in the broader market <.KS11>.
($1 = 1,165.8000 won)
(Editing by Christopher Cushing)
Company Earningsorganic light-emitting diode