LG Display ends large LCD business with plant sale to CSOT

South Korea’s leading display maker LG Display Co. is gearing up its transition into a leading organic light-emitting diode (OLED) panel maker after agreeing to sell its large-size liquid crystal display (LCD) plant in China to TCL China Star Optoelectronics Technology Co. (CSOT) for 10.8 billion yuan ($1.5 billion).

The company announced in a regulatory filing on Thursday that it signed a binding contract with CSOT to sell its entire 80% stake in a large LCD panel plant in Guangzhou, China, for 10.8 billion yuan on the same day.

The plant was initially a three-way joint venture set up by LG Display with a 70% stake, Guangzhou Development District with 20% and Skyworth with 10%. Earlier this month, LG Display acquired Skyworth’s stake for 1.3 billion yuan to bump up its stake to 80%.

The sale will be completed in March 2025, it added.

The deal comes less than two months after the Korean display maker picked the Chinese peer as the preferred bidder for the plant.

Following the sale of the Chinese plant, which produces large-sized LCD panels, LG Display will completely withdraw from the large LCD panel market. At the end of 2022, it ceased LCD TV panel production at home.  

The Korean panel maker is in the course of scaling down its large-sized LCD panel business in response to its Chinese rivals’ fast ascent in the sector with cheaper options.

Instead, LG Display has been beefing up its more profitable OLED panel production in recent years.

LG Display said it will use the proceeds from the sale of its Chinese plant to reform its business portfolio to focus on OLED panels. The sale is also expected to bring more cash that can shore up its financial health.

OLED PANEL LEADER

Following the deal, the overall TV panel market is also expected to shift from LCD panels and embrace OLED panels.

LG Display plans to focus on measures to bolster the competitiveness of its OLED panel business for stable profit generation.

In particular, the Korean panel maker plans to cement its leadership in the premium TV market by expanding a high-end lineup of large OLED panels to differentiate it from its rivals. It will also strive to enhance product quality and lower raw material costs to ensure higher profit margins.

Demand for large OLED TVs has revived since earlier this year, which bodes well for LG Display's plan to focus on these panels. 

In the small and mid-sized OLED panel market, it will actively leverage its outstanding production capabilities to increase its share in the high-end sector.

It also plans to expand its presence in the IT OLED panel market with its technology leadership and will strive to win more orders of automotive OLED panels to solidify its leading position in that segment. 

While ending the large LCD panel business, LG Display will continue producing premium LCD panels for IT and automotive use, the company said.

Write to Jeong-Soo Hwang at hjs@hankyung.com

Sookyung Seo edited this article.