LG Display is on track to secure over 1 trillion won (approximately $800 million) as it finalizes the sale of part of its operations in China. The cash influx from asset liquidation will be directed towards investments in next-generation organic light-emitting diode (OLED) facilities and enhancing its automotive competitiveness.
According to industry sources on July 28, LG Display is set to complete the transfer of its vehicle liquid crystal display (LCD) module business from its Nanjing subsidiary by September 30. The negotiations, originally scheduled for completion on July 30, were delayed by about two months due to additional settlement issues between the two companies.
The transfer involves the Nanjing subsidiary of domestic parts partner Top Run Total Solution. The sale price is approximately 491.5 million yuan (around $104 million). The company aims to outsource the production of vehicle LCD modules, which have become less profitable, to reduce fixed costs and maximize production efficiency.
A significant portion of the funds will be used to respond to orders from global automakers such as Mercedes-Benz, Genesis, and Cadillac. Investments will focus on enhancing the efficiency of the 'tandem OLED' technology, which stacks two layers of organic light-emitting layers, and on the 'ATO' line that applies glass substrates to reduce thickness and improve device efficiency.
Funds will also be allocated to improve production yield and efficiency in the dedicated automotive module line at the Paju P10 plant. LG Display is investing a total of 1.26 trillion won (approximately $1 billion) to expand its OLED technology infrastructure, with a goal of completing the expansion in the first half of next year. The company plans to concentrate high-margin premium OLED production and research and development (R&D) at its key Paju facility to solidify its leadership in the automotive display market.
The company is also accelerating proactive R&D to secure next-generation panel application technologies. During a recent second-quarter earnings conference call, LG Display stated, "We will gradually increase the proportion of our R&D budget relative to sales and prioritize the allocation of secured liquidity towards technological evolution." Following a reorganization of its advanced technology R&D team at the beginning of the year, the company has launched new projects aimed at maximizing the luminous efficiency of 8.6-generation IT OLED panels and tandem OLED devices.
Industry analysts expect these moves to stabilize LG Display's short-term cash flow. In the second quarter, the company recorded one-time costs of about 240 billion won due to a large-scale voluntary retirement program and workforce optimization efforts. The additional funds coming in at this point, following the completion of restructuring costs, are expected to further enhance operational efficiency by reducing fixed costs.
An industry insider noted, "By streamlining the LCD module line, LG Display is increasing the flexibility of its cost structure while timely allocating asset liquidation funds to the Paju OLED infrastructure and next-generation R&D. This will allow the company to concentrate resources on high-value-added automotive and IT OLED sectors, further facilitating its business restructuring efforts."
* This article has been translated by AI.
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