With demand for LCD panels dropping sharply and vendors such as Sharp Electronics Corp. floundering, LG Display Co. Ltd.’s (LGD)
reported 126 percent revenue growth in Q2 is exceptional. So what is LG doing that other display makers aren’t?
Among other moves, LGD is taking a big risk in transitioning a large portion of its amorphous-silicon liquid crystal display (a-Si LCD) fab to manufacture low-temperature polysilicon (LTPS) LCD panels, according to IHS. The conversion will result in an 80 percent loss in yield, the research firm reports. Despite the capacity loss, the G6 LTPS LCD line will give LG Display access to a larger and more efficient LTPS fab to service the high-end, high-ASP smartphone panel market.
It also doesn’t hurt to have a customer like Apple Inc. (Nasdaq: AAPL). Thanks in large part to shipments of the iPad, LGD’s tablet panel revenue reached $610 million in Q2 from $270 million in Q1:
“LGD can credit Apple for its outsized presence in the market for small- and medium-sized display panels, defined as those sized less than 10.x inches, and used in products like smartphones and digital still cameras, in addition to tablets,” said Vinita Jakhanwal, director for small and medium displays at IHS. “The company started volume shipment for the higher resolution, new iPad panels -- the third iteration of Apple’s best-selling media tablet device -- during the second quarter, IHS believes, on top of furnishing panels for the older iPad 2 version. This amplified LG’s presence in the Apple supply chain, in addition to the company already supplying tablet panels in the first quarter to other tablet players such as Amazon, Barnes & Noble and Research In Motion.”
The current conversion plan will keep 60 percent of the G6 fab capacity dedicated to making a-Si LCDs for tablets, mobile phones, or other such applications, IHS says. All told, the LGD fab conversion move could prove prescient: LG Display will likely be competing with Sharp and the Japanese joint venture Japan Displays in supplying panels for Apple’s new iPhone, says IHS. By initiating its fab conversion, LGD will not only be able to support Apple but participate in the high-growth smartphone panel market:
The G6 LTPS LCD line will also prove beneficial as Apple continues the evolution of the iPhone display, and as other smartphone original equipment manufacturers also keep improving the display resolution specifications. Given current manufacturing and performance guidance, more than 60 million 4.1-inch LTPS LCD panels can be produced in a year from a G6 LTPS LCD fab.
LTPS LCDs can also be used as backplanes for organic light emitting diode (OLED) displays, IHS says, and LG Display has the option of adding its converted G6 LTPS line to active matrix organic light-emitting diode (AMOLED) capacity if it elects to do so.
Sharp, by comparison, invested heavily in the world’s first (and reportedly largest) 10G thin-film-transistor (TFT) LCD fab in 2009. Although TFT LCD is the dominant technology in the display market, prices and demand have both dropped in recent months. Other LCD makers such as Samsung, Toshiba, and Sony have consolidated their operations to save costs and compete on price. Sharp reportedly is considering selling two of its LCD factories; one in China, and one in Mexico.
The LGD fab conversion is expected to take place in stages over a so-far-unspecified number of quarters, according to IHS, but its effects will most likely be seen starting in the second half of 2013, at the earliest.
LG has done a great job to generate such appositive revenue during these times. This is specifically because of their positive outlook and investments to move to LTPS technology for manufacturing. The other reason is they are ahead of sharp to manufacture small size Hugh resolution panels. I wonder how the business of other players like AUO
and NEC.
Barbara, i understood that LGD worked partly due to the technology and partly due to the iPad's success. What are the revenue growth of other players than Sharp? Maybe this can give a better picture of the LCD market growth.
Without culling through annual reports, I can say that Toshiba and Hitachi were profitbale; Sharp and Sony were not; and I think Samsung struggled in Q2. IHS tallies display sales numbers every so often: I'll post the link if I can find it.
@Barbara, any particular reason for this under performance by Samsung ? Isn't it true that Samsung is very good in its smartphone business, I am assuming they are using their own displays in their devices.
I correct myself: Samsung grew a bit in Q2. According to IHS, it was due to an acquisition. I still haven't seen a breakout of panel sales, but I would supect that Samsung did OK. I need to check the corporate results against its market segemtns--my bad.
I think the primary reason why Samsung has been doing well is because of its vertically integrated supply chain where the company produces the displays as well as tablets, smartphones and TVs etc. This is the reason why Samsung display will always have a constant demand for its products and will never lose out on sales.
LGD is taking a big risk in transitioning a large portion of its amorphous-silicon liquid crystal display (a-Si LCD) fab to manufacture low-temperature polysilicon (LTPS) LCD panels
Barbara, thanks for the post. What about LED display ? Is LG investing heavily on LED display technology or still sticking to LCD technology ?
Is LED display better than LCD from consumers perspective - how reliable, colour contrast, pixel and other factors? I havent come across LED display in market though, but LG might be doing some clandenstine project on it.
@Wale: LED seems to be taking over the world of displays. LED displays are part of everything now be it TVs, Laptops, Smartphones or tablets. I am surprised as to why you haven't been able to see them in the market. As for the consumers, yes LED offers a much sharper display and is considered to be more energy efficient to it is being favored by consumers.
@TamoorZ, LED displays in the market are just another form of LCD display. I remember reading that the LED display is just a marketing gimmick. The displays are still LCD but with LED backlighting instead of fluorescent bulb. I do not know whether there are any pure LED displays available for consumers. I know that big screens in stadiums or parks are usually LED.
@Himanshugupta: There seems to be a major difference in terms of the display quality in LCD and LED screens so I do think it's a major breakthrough. As for the technical details on how LED is being used, yes the usage differs from the way LED is used in Digital Displays, but I would say it would still fall under the category of LED rather than LCD.
I think there may be a couple advantages to LED vs TFT LCD, but I'm a little out of my depth here. One thing is that LEDs are standalone lights; TFTLCD are connected through a grid of circuits and sometimes on failure affects others. The other advantage is that LEDs are supposed to be very energy efficient. I'm not sure how well those two things translate to TV, and it is true that the LEDs are used for backlighting.
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Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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