Chinese brands lower the price of LCD panels and LG has a hard time
During the last year LG Display has closed three production lines of LCD panels
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The subsidiary of LG, LG Display specialized in the manufacture of LCD and OLED panels, enjoys a very solid position in the market of panels for display devices. To sense its strength in the segment of OLED panels we just have to look at not only selling its solutions to LG Electronics, but also Sony, Philips, Panasonic or Bang & Olufsen, among other brands, which puts it in a position very comfortable.
However, if we stick to the segment of LCD panels the picture is very different. According to the IHS Markit consultancy, LG Display has led the LCD panel market for several consecutive years, but in January 2017 an unexpected milestone occurred: the Chinese company BOE Technology Group managed to position itself as the largest provider of LCD panels of more than 9 inches of the world. The latter company reached a market share of 22.3%, while LG Display was slightly below (21.6%).
Reuters has published a few hours ago an article that reflects a trend that is possible to intuit without the need to make a show of imagination: the weight that Chinese manufacturers are buying in the market of LCD panels has caused their price to be drastically reduced during the last months.
The 50-inch LCD panels reached during last August a price 32% lower than in the same month of 2017, according to IHS Markit. This is just one example, but it illustrates very clearly the situation in which this market is located. This downward trend contributes to the consumer electronics devices that incorporate these panels reach the stores at a lower price, but, logically, also has a direct impact on the results of the brands that led this market until that Chinese companies have started blunting.
During the last year LG Display has closed three production lines of LCD panels. And it has also canceled the start-up plans of a new line that, apparently, it had planned. The situation of Samsung is not very different. In fact, according to Reuters, the latter began to abandon some old lines of production of LCD panels from 2010, possibly in anticipation of what was coming. Currently the Samsung subsidiary specializing in the manufacture of LCD panels has only two factories in South Korea and one in China.
Obviously, LG Display is not the only company affected by the aggressive competition of Chinese brands, but the leadership it exercised in the segment of LCD panels until early 2017 has caused the impact on it of this trend is greater. To contrast all this information we have contacted the LG responsible in Spain, and, although they have not yet been able to officially confirm the figures that describe the impact that this crisis may be having in the coffers of LG Display, yes they have advanced us that the South Korean company is focused on OLED technology.
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