Has South Korea's pillar LCD industry been completely "crushed" by China?

LCD is the abbreviation of Liquid Crystal Display. The structure of LCD is to place a liquid crystal box between two parallel glass substrates, set TFT (thin film transistor) on the lower substrate glass, and set color filter on the upper substrate glass. The signal and voltage on the TFT are used to control the rotation direction of the liquid crystal molecules, so as to control the polarized light of each pixel to achieve the display purpose. Now LCD has replaced CRT and become the mainstream. The price has also dropped a lot and has been fully popularized.

LCD has always been a pillar industry in South Korea, but things have changed in recent years. There are reports that Chinese companies are developing faster than expected in this field.

SDC Asan LCD production line (Image source: SDC)

Samsung Display's large-size business unit implements voluntary resignation

CINNO Research Industry News, September 3, Samsung Display (SDC) is implementing voluntary resignation for employees in the large-screen business unit. No specific information has been disclosed on the implementation targets, scale, compensation, etc.

An SDC official said: Voluntary resignation is one of the daily resignation systems. It is not intended to reduce the number of people, but is only implemented for "voluntary" personnel.

SDC will remove the LCD production line of L8-1 from the beginning of this month, but has not yet decided whether to invest in large-size OLED for this line.

The price of large-size TV LCD has been on a downward trend. According to a researcher at KB Securities in South Korea, the prices of 55-inch and 66-inch LCD panels last month fell by 25% and 20% year-on-year compared with 2018. South Korea's 8.5-generation line cannot compete with China's 10.5-generation line, and South Korea needs to get rid of the LCD business adjustment strategy.

The same 65-inch can be cut into 3 slices on the 8.5-generation line, but 8 slices on the 10.5-generation line. The 8.5-generation lines of Korean companies cannot continue to compete with China's large-scale 10.5-generation lines.

LGD also began to implement voluntary resignations to accelerate its move away from LCD

According to reports, LG Display (LGD), which decided to invest 3 trillion won in Paju P10 in July last year, is also evaluating voluntary resignation and staff reduction plans, and is also evaluating the cleanup of some LCD production lines. Last year, LGD implemented a round of voluntary resignation for manufacturing employees, and it is estimated that about 2,000 to 3,000 people resigned at that time.

South Korea's display panel performance has also been declining due to the impact of the LCD market. LGD lost 368.7 billion won in the second quarter, and SDC also lost about 100 billion won after deducting the 900 billion won compensation from Apple.

Under the low-price offensive of Chinese LCD manufacturers, LGD is also taking steps to voluntarily resign. After the news of SDC's voluntary resignation was announced on the 3rd, LGD, which was preparing to reduce its staff, also moved up its schedule. The strategy of Korean companies to get rid of LCD is on the right track.

According to industry news on September 4, LGD will soon announce a voluntary resignation plan. The target is field OP and technical positions (TECH) who have been employed for more than a certain number of years. Some office staff will also implement a voluntary resignation system. LGD plans to accept voluntary resignation applications by the end of the month and complete the resignation procedures within the next month. In addition to salary and bonuses, the resigning staff will also receive pensions, retirement consolation money, and job transfer subsidies.

LGD has already implemented voluntary resignation in September last year, and this is the second time. LG explained that the implementation of voluntary resignation is "cost reduction due to the deterioration of business, calling for sharing difficulties." Last year, about 3,000 people resigned, but the number of resignations this year is expected to be larger. If the number of resignations in each organization does not meet the target number of resignations, other structural adjustment plans will be evaluated. In order to streamline the organization, the adjustment of personnel such as appointed and resident staff is also being evaluated at the same time.

LGD originally planned to complete the staff reduction by November, but after SDC implemented voluntary resignation for the large-size business unit on the 3rd, LGD also made adjustments to the schedule. SDC plans to withdraw the L8-1 LCD line in Asan, Chungnam, South Korea from the beginning of this month.

South Korean panel manufacturers have made structural adjustments one after another because China's low-price attack has caused LCD revenue to fall sharply. LGD lost 368.7 billion won in the second quarter, and SDC actually lost money after deducting the one-time subsidy income.

LGD will continue to accelerate the OLED transition in the future.

LGD CFO Suh Donghui also said at the second quarter earnings conference: In the future, we need to consider not only adjusting the utilization rate, but also whether to stop the line. The industry speculates that the only remaining large-size LCD line in Paju may also stop production. LGD announced in July that it would invest 3 trillion won in the Paju P10 OLED 10.5-generation line, and last month the Guangzhou 8.5-generation OLED line also entered mass production.