Attendees stand under a tunnel wall of LG OLED 4K TVs during the 2017 Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S. (Photographer: Patrick T. Fallon/Bloomberg)

LG Display to Stay Reliant on LCDs Even as Phones Shift to OLED

(Bloomberg) -- As Apple Inc. looks set to make more iPhones using organic light-emitting diode displays, one of its key screen suppliers expects revenue will remain driven by older technology.

LG Display Co. is predicting that liquid-crystal displays will generate most of its overall sales through next year even as it pushes to provide Apple with an alternative to Samsung Electronics Co. when it comes to smaller OLED. Producing the screens for smartphones in high volumes is a “struggle,” said Yoon Soo-young, head of research & development at the Seoul-based company.

While LG Display carved out a strong position in large OLED screens, such as those for TVs, Samsung bet big on the market for smaller sizes and now dominates output for mobiles and secured all the orders for the most advanced iPhone. With a glut of LCD output crimping prices and profit margins for the industry, LG is trying to overcome poor production yields to win OLED orders from companies like Apple. The Seoul-based company has never made an operating profit from the next generation screens, which cost more but are valued for their brighter colors and flexible shapes.

“I can hear the sound of prices dropping,” Yoon said. “We still need to earn money from LCDs. OLEDs need a lot of investing and we need profits from our LCD business to fund the investments.”

LG has won TV OLED supply orders from Sony, Panasonic and China’s Skyworth Digital although conversations with Apple for iPhones have been in vain so far. The South Korean company is targeting for OLEDs to account for 40 percent of revenue by 2020, with the rest coming from LCDs.

Yoon spoke with Bloomberg News about LG Display’s prospects and challenges.

Will LG eventually stop producing LCDs?

Yoon: “China is building so many 10.5 generation LCD factories. If it continues to get harder to make money from LCDs, there’s no reason not to make the switch. How fast we get there and how aggressively we push for it could change but that’s the direction we’re headed.”

What are the challenges in growing bigger with OLEDs?

“We’re the only producer of large-sized OLED panels for TVs. The ecosystem needs to have at least two to three players for a healthy environment. LCD will inevitably remain the dominant technology for a considerable time. Although OLEDs have taken hold of the premium TV market that’s only about 3 percent of the broader market.”

What are some achievements since LG’s first OLED TV in 2013?

“We’ll be able to generate profit in the near future. OLEDs have now gone mainstream, at least in the premium market, whereas we were trying to find a place for OLEDs back then. People have stopped asking the ‘so what’ questions about OLEDs.”

What’s the latest on OLED displays for foldable devices?

“It may take a few more years. But things have become more detailed than before.” Yoon said there is a push for larger screens in smaller packages, and flexible OLED makes that possible, but it has yet to be worked out whether it’s best on the inside of the fold or wrapped around the outside of the device where it it’s exposed to external shocks.

What’s the outlook for the virtual reality market?

“The market isn’t very big yet. We’ve been saying that the market will get bigger from 2020. We unveiled a high resolution display with pixels per inch of about 1,440 for the first time last month. But I’m not sure yet how big the market will get. Everything has to come together including relevant content and the infrastructure. It’ll take a bit of time. Infrastructure has improved but many devices are for individual content producers while there isn’t much for broadcasting systems.”

©2018 Bloomberg L.P.

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