LG Chemicals Once Again Postpones Its Plan of Extending LCD Glass Substrate Factories

LG Chemicals is postponing its plan of extending LCD glass substrate factories due to global economy and worsened LCD market conditions. This is the second time it is putting off its plan of extension after it did so in 2014, and possibilities of withdrawal are also being brought up.

According to industries on the 20th, LG Chemicals is temporarily postponing its plan of investing into LCD glass substrate. It is putting off a plan in which LG Chemicals was planning to invest $591 million (700 billion KRW) to extend lines for glass substrate.

In 2012, LG Chemicals made an announcement that it will add 2nd and 3rd factories in Paju by investing $591 million. It was planning to supply Gen. 8 glass substrate with 0.5mm thickness to LG Display. Gen. 8 is a glass substrate with 2200mm and 2500mm in width and length respectively and it is usually used for 40-inch LCD TVs.

LG Chemicals once postponed its investment in March of 2014, and it is heard that only its 1st line has been operating since there were not additional facilities.

LCD glass substrate is a thin glass substrate that coats thin film circuit. It has high technology barriers in heat-resistance, chemical-resistance, and surface quality processing. Although it is a huge market that demands $14.4 billion (17 trillion KRW) globally, it is being oligopolized by only small amount of businesses such as Corning, Asahi Glass, Nippon Electric Gloss and others. Although LCD panel industries might struggle due to recession, glass substrate manufacturers make record-breaking operating profit ratio of 40% due to high-added values.

This is the reason why LG Chemicals jumped into glass substrate business. This business was pushed by LG Group since it wanted to get out of its dependence on major materials and strengthen its competitive edge in display business.

In 2009, LG Chemicals signed a contract with Schott AG, which is a German glass manufacturer, about introducing related technologies. It finished constructing facilities in 2011 and started operating them in 2012.

It can be seen that a reason why LG Chemicals is postponing its investment is because it interlocks with current LCD market situations. It does not have to force itself when markets have become worsened due to oversupply of LCDs.

Actually display manufacturers are being pressured as prices of LCD panels have fallen sharply as they are only 37% of LCD prices at the beginning of this year. Extension can actually come back to haunt LG Chemicals and force LG Chemicals to not be able to supply anything.

Global economic recession is also affecting LG Chemicals. There was a time in the past when LG Chemicals postponed its investment for poly-silicon, which is raw material for solar energy products, due to uncertainty in global economy.

It is not confirmed when LG Chemicals will resume its investment for glass substrates. However a possibility of LG Chemicals pushing for investment within a short period of time is low. A fact that this generation is shifting from LCD to OLED display is also another variable, and possibilities of switching from LCD glass substrates to OLED glass substrates are also being brought up.

“We are currently examining whether we will make additional investments into glass substrates or not and will make an announcement as soon as we make decisions.” said a person affiliated with LG Chemicals.

Staff Reporter Yun, Kunil | [email protected]