​LG Display saves face in Q1 amid IT slump

LG Display is focusing its display panel productions on TVs rather than smartphones and PC monitors as the global IT market, after years of growth, hits a snag.
Written by Cho Mu-Hyun, Contributing Writer

LG Display barely avoided turning to a loss as its net profit dropped 100 percent from a year ago, its earnings for the first quarter show.

The display-panel making affiliate of LG Electronics posted net profits of 1.2 billion won ($1 million), operating profits of 39.5 billion won ($35 million), and a revenue of 5.989 trillion won ($5.22 billion), by focusing on profitability and high-tech products despite the global economic recession.

LG Display said it has switched some of its production lines for IT products -- smartphones, PCs, and monitors -- which have shown low profitability to more money-making TVs.

Due to the saturation of the market, set-makers in smartphones such as Apple -- which saw its sales drop for the first time in 13 years -- and Samsung are lowering price tags of their premium models as well as offering costlier low- and mid-end phones that are pressuring the margins in the component side as well.

LG Display said display panels for mobile accounted for 23 percent of the revenue, while those for monitors took up 15 percent, tablets and notebooks together accounted for 24 percent, and TV was 38 percent.

In TVs, oversupply in Liquid Crystal Display (LCD) has forced prices to drop but LG said it defended profits by pushing over 60-inch premium products that offer ultra-high-definition (UHD) resolution.

New products slated for second quarter launches will help steady profits, the company said in a statement.

LG Display is also pushing organic light emitting diode (OLED) panels. The number of those being used by LG Electronics for TVs is growing, but their contribution to revenue has been minimal.

It is also expanding its line for small-sized OLEDs that are aimed at Apple's future iPhones, a supply deal that rival Samsung also wants.

LG Display is one of Apple's largest suppliers for LCD panels for the iPhones and flexible OLED panels for the Apple Watch. Apple has preferred LG and Japanese display makers over Samsung due to the legal battle between the two largest smartphone makers but friction has since eased.

Like Foxconn, which recently acquired Sharp to gain footing in the display market, and many of those in the iPhone's value chain, LG may look for other revenue sources to offset decline, or leverage new technology such as OLED to gain leeway in negotiations with Apple.

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