LG to Reconsider Chinese Plant due to Falling LCD Prices

      October 21, 2011 10:43

      LG Display, the world's largest LCD manufacturer, said on Thursday it will reconsider all of its new investment plans, including the construction of a manufacturing plant in China. A sharp decline in LCD prices caused the company to suffer an operating loss of W492.1 billion (US$1=W1,145) in the third quarter, marking the fourth-consecutive quarterly loss.

      Jeong Ho-young, vice president and chief financial officer at LG Display, said during a briefing in front of investors, "As we have been experiencing a poor earnings performance, we will think over all of our investment plans and we don't plan to make any new LCD investments from the first half of next year."

      Jeong added, "We are also weighing the timing of when to break ground on our LCD plant in China." This suggests that the company's plans to build the plant in Guangzhou, China could be postponed indefinitely.

      LCD panels are key components in TVs and monitors and are among Korea's top export items along with semiconductors. According to market researcher DisplaySearch, top-ranked LG Display accounted for 28.6 percent of the global market during the third quarter of this year, while No. 2 player Samsung Electronics owned 24.3 percent. Taiwanese, Chinese and Japanese manufacturers followed.

      The global LCD market has suffered steep price declines following lackluster demand and oversupply since the second half of last year, with prices plummeting to their lowest-ever levels. Industry insiders said LCD prices are even lower than production costs now, creating an untenable situation of mounting losses if panel sales rise.

      Samsung is also trying to overcome the tough market conditions by replacing top officials at its LCD operations. But the company intends to continue building its LCD plant in Suzhou, China. Construction began in May of this year and the plant will begin production in 2013.

      Samsung is pushing ahead with its strategy of investing aggressively during market slumps in order to gain a solid lead against its competitors.

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