By Jun Ji-hye
Samsung Display and LG Display are pushing for personnel restructuring and labor cost reductions in their LCD businesses to grapple with an industry slump resulting from intensifying competition with Chinese companies, officials said Monday.
The move comes as there have been no signs of improvement in market conditions, with the rise of BOE and other Chinese companies having led to a decline in large LCD panel prices.
Samsung Display has been implementing voluntary redundancy programs to shed workers. The scale of compensation given to outgoing workers is unknown.
"Voluntary redundancies are part of our retirement programs and have been underway on a permanent basis," a Samsung Display official said. "We are accepting applications for the programs and are not considering forcibly reducing staff."
Reduction of the labor force seems to be an unavoidable choice as the display-making subsidiary of Samsung Electronics has trimmed down LCD production at its factory in Asan, South Chungcheong Province, in response to worsening profits.
The company is also expected to announce a decision soon to suspend the operation of one of the eighth-generation LCD lines there.
KB Securities analyst Kim Dong-won said Samsung Display's personnel reduction is part of the firm's medium- to long-term strategies to reorganize failing businesses and shift its focus to organic light-emitting diodes (OLED).
"It is a sign of the company's strategy to exit the LCD business," he said, noting that the company is expected to sell off the LCD lines which are scheduled to come to a halt.
LG Display is also pushing to restructure its LCD-dedicated workers through voluntary redundancies.
"We are reviewing various aspects concerning our LCD business, including the human resources issue," an LG Display official said. "But nothing has been decided yet, as we need to discuss details with unions."
The two display makers have faced difficulties and falling profits in the LCD business at a time when BOE has already begun full-fledged production of 10.5-generation LCDs, dominating the global LCD market.
Other Chinese companies including CSOT have also made aggressive investments in their LCD production lines.
The two Korean companies are instead redoubling their efforts to enhance their presence in the OLED market.
Analysts expect Samsung Display to increase its investment for next-generation display panels including quantum dot organic light-emitting diodes to improve profitability.
Meanwhile, LG Display announced a plan in July to invest 3 trillion won ($2.5 billion) in manufacturing its next-generation OLED panels at its P10 plant in Paju, Gyeonggi Province.
The company also held a ceremony to celebrate the construction of its new OLED factory in Guangzhou, China, Aug. 29, and began mass-producing large-sized OLED panels there.