LG Display Surprise Loss Points to TV Challenge, iPhone Struggle

(Bloomberg) -- LG Display Co. reported an unexpected loss for the first quarter, indicating that competition from China is hitting its television business while demand for Apple Inc.’s iPhone 8 is tapering off.

LG Display reported an operating loss of 98.3 billion won ($91 million) for the quarter, compared with analyst estimates of a 12.7 billion won profit. LG, which gets the largest slice of its revenue from the television business, has faced increasing competition from Chinese rivals that has hurt pricing in the segment.

LG Display’s results also give insight into Apple, which accounts for 29 percent of LG Display’s revenues, according to data compiled by Bloomberg. The Korean company provides LCD screens for Apple devices like the iPhone 8, while more expensive OLED screens for the iPhone X are supplied by Samsung Electronics Co. LG’s mobile revenue fell about 32 percent, suggesting the lower-end iPhone may be suffering from weak demand -- on top of the existing concerns about the pricey iPhone X.

“It’s natural that there’s a drop in mobile-phone screens, because Apple has now pivoted to OLED instead of LCD,” said Park Sung-soon, an analyst at Seoul’s Baro Investment & Securities.

LG Display got 43 percent of its revenue from the television segment, while mobile, monitors, notebooks and tablets accounted for the rest.

“The biggest reason for the drop has to do with the falling prices of television panels,” said Park.

Analysts are closely watching Apple’s suppliers for any indication of how the company will do when it reports earnings next week. Apple’s three main iPhone suppliers in Asia -- Hon Hai Precision Industry Co., Pegatron Corp., and Wistron Corp.-- have shown signs of slowing growth. That followed Apple’s main chip manufacturer, Taiwan Semiconductor Manufacturing Co., giving a revenue forecast that missed analysts’ average estimate by about $1 billion.

LG Display shares rose less than 1 percent as some analysts feared even worse results from the increased television panel competition, especially from China competitors like BOE Technology Group Co. The Korean company’s shares had already dropped 17 percent this year before today.

“There was a lot of fear surrounding BOE’s ramp up of LCD screens at its 10th generation factory,” said Soh Hyun-cheol, an analyst with Shinhan Investment Corp. in Seoul. “The concerns had been excessive and a lot of the bad news has been factored in.”

©2018 Bloomberg L.P.