| LG Display's production cluster in Paju, Gyeonggi Province / Courtesy of LG Display |
Display unit's investment plan reflects Apple's growing OLED demand
By Kim Bo-eun
LG is strengthening its ties with Apple as its core client, as its affiliates are increasingly supplying components for the U.S. tech giant. LG Display is on track to expand production facilities for medium-sized to small organic light-emitting diodes (OLEDs) set to be supplied for Apple's smart devices.
LG's display manufacturing unit submitted a regulatory filing Tuesday, outlining 3.3 trillion won in investments through 2024 for production of medium-sized to small OLEDs at its plant in Paju, Gyeonggi Province.
The additional investments are set to scale up LG Display's production capacity for smaller OLEDs to 60,000 on a monthly basis, up from the current 30,000.
LG said that it could not comment on client matters, but sources said that the smaller display panels produced here are set to be supplied for Apple's next-generation iPads and iPhones, as the Cupertino-based company is increasingly opting for OLEDs in its devices.
Apple incorporated OLEDs into its iPhone for the first time with the iPhone X in 2017, and all models in its latest iPhone 12 series have OLEDs. The U.S. company is also set to start using OLEDs in its next iPad to be released next year.
LG declined to confirm the specific production lines that would be scaled up. Industry sources say that the E6-3 line will likely be expanded and exclusively assigned to produce panels for Apple, as a new line will be needed for to produce the panels used in iPads.
LG has lagged behind Samsung in smaller OLEDs, given that its strength has been in large OLEDs for TVs. LG Display is the only display manufacturer capable of mass-producing large OLED TVs.
Samsung Display has dominated the global market for smaller OLEDs with a market share of about 80 percent.
Competition is expected to heat up, with LG's planned investments into smaller OLEDs, as it seeks to catch up with Samsung.
Chinese players such as the country's top display manufacturer BOE are also stepping up their game. BOE is constructing a production plant for smaller OLEDs in the southwestern Chinese city of Chongqing. The OLED production line is set to be the largest for a single factory in China. It is set to produce 115 million panels on an annual basis.
But BOE has only supplied OLEDs for refurbished iPhone models, which shows that the Chinese vendor still has yet to upgrade the quality of its panels.
“Chinese players' strategy is to mass-produce the panels at lower prices, but their panels are currently behind in terms of quality and production yield. Still, this doesn't mean we don't have to worry about Chinese competitors, as they can catch up quickly,” an industry source said.
OLEDs are considered a next-generation display, given the fact that they are thinner, lighter and show improved picture quality over liquid crystal displays (LCD) in wide use. Chinese vendors have eaten into the profitability of Korean LCDs makers by offering cheaper prices. Some market observers project that it is only a matter of time before Chinese firms dominate the market for OLEDs as well.
Apple is increasingly leveraging its partnership with LG, as it steps up its focus on the Korean market. LG's electronics goods retailer Best Shop began selling Apple's products this week, which is a first.
LG, which withdrew from the smartphone business, needed new products to sell at Best Shop. So it put Apple's products up for sale, as the U.S. company had been seeking new sales channels. Previously, Apple's devices were only offered at its official store and smartphone dealerships.
LG's affiliates are longtime suppliers of Apple. LG Display is supplying panels, LG Innotek offers camera modules and LG Energy Solution provides batteries.
Apple's expansion of its collaboration with LG affiliates raised expectations of the latter's involvement in the U.S. firm's envisioned autonomous electric vehicle project. LG Electronics in July launched an ePowertrain joint venture with the Canadian mobility tech firm Magna International. Months earlier, The Korea Times reported that the venture was “very near” to winning an initial volume order of Apple's first-generation electric vehicle, tentatively named the “iCar.” At the time of the report, LG said that it could neither confirm nor deny it.