LG Display is deeply thinking about the conversion of the TV LCD production line in the Paju P8 factory in Gyeonggi-do. This is why recently the 10.5th generation(2940mm x 3370mm) LCD lines in China are operating continuously, and the 8.5th generation(2200mm x 2500mm) line has been hurting the ROI of the production of TV panels.
The alternative products are also considered switching to organic light emitting diode(OLED) TV lines, which have a price premium compared to LCD TVs, or converting the line to high-end IT(notebooks) panels for demand.
OLED TV switching? “Guangzhou factory is waiting for operation…”
The possibility of OLED conversion of the P8 plant TV panel line has already been raised since early last year, because the TV LCD prices have remained weak since 2H17. LG Display also stated that it is considering additional OLED conversion of 8.5G LCD line whenever there is an opportunity in the conference call after the quarterly results.
Since the TV LCD line in the P8 factory has already been converted to OLED line(E4), it is possible to change to the OLED line for TV at any time as long as the decision would be made.
Conculsively LG Display has not decided P8 LCD line processing problem until now for two reasons. First of all, there is an OLED factory in Guangzhou, China.
The Guangzhou plant, like the P8, uses 8.5 generation discs. Up to three OLED lines for TV can be installed. With the completion ceremony on the 29th, Line 1 will be in mass production, Line 2 will be in operation in 4Q this year and Line 3 in 2Q next year. Each line has a capacity of 30,000 sheets per month.
There are three 8.5G OLED lines in China, which have no choice but to be better than domestic in cost efficiency, so there is no reason to add one more in Korea. Furthermore, from 2022, the 10.5th generation OLED line will be operated at the Paju P10 plant. The 10.5th generation line can produce eight 65-inch panels or six 75-inch panels. OLED conversion of P8 is inferior to Guangzhou line in cost and P10 in production efficiency.
In addition, rival Samsung Display was expected to shut down some 8.5G LCD factories to convert to QD OLED lines. If the 8.5G plant closes, LCD prices could rebound as supply declines across the industry.
Initially, the industry predicted that Samsung Display will stop operating L8-1-1 as soon as possible. This is because it takes time to install large-area OLED equipment while withdrawing the old LCD equipment. However, Samsung Display's decision has been delayed up to now.
Jeahyuk Lee, Display Supply Chain Consultant (DSCC), explained, “Samsung Display's LCD line shutdown is delayed and 10.5th generation LCD production from China is overflowing".
What about high-end monitor production transition?
If the persuasiveness of P8 OLED conversion is low due to the Guangzhou OLED line and P10 10.5th generation OLED, it may be considered to switch to a high-performance monitor LCD panel production line.
Despite the severe LCD supply glut this year, monitor LCD prices were solid compared to LCD TVs. According to market researcher IHS Markit, the 21.5-inch(FHD) monitor, which was $ 43.2 last February, recorded $ 41.7 in August. The price has dropped by 3.4% in six months.
In the case of LCD TVs, 55-inch 4K UHD products are priced at $ 140 this February and are currently trading at $ 106 as of August. In half a year, prices fell by 24 percent. 55-inch panel is the main product of 8.5 generation LCD line.
Monitor panel prices are solid compared to TV panel panels because Chinese panel makers do not produce monitor products in the 10.5G line, and demand for high-performance monitors for games is strong.
Recently, PC games have been optimized for frames per second(FPS) at 120Hz or higher. Since fast motion is required, existing 60Hz monitors cannot accurately represent character movement. The aspect ratio of screens is overwhelmingly preferred over '16: 9 'rather than' 4: 3 '.
According to IHS Markit, the number of gaming monitors shipped at 120Hz or higher last year was 4.5 million units, more than doubled in 2017. The main specification has also moved from 120Hz to 144Hz. This year, the gaming monitor market is expected to exceed 6 million units annually.
In addition, as Google started streaming game service 'Stadia', the resolution is also increasing. Most PC monitors are FHD, but Stadia will support 4K UHD and 8K UHD in the future. Unlike TV LCDs, which have been stagnant for several years, demand for upgrade replacements has increased in the PC monitor market.
An official of LG Display said, “We are also considering changing the P8 TV LCD line for IT (monitor / laptop) and public information display(PID).” and "We can change the target market because most of the depreciation of the P8 facility has been terminated".