[DingTech Observation] As LGD, the Korean panel giant, strategically pivots its focus towards OLED displays, it has gradually withdrawn from the LCD liquid crystal display panel market in recent years. Rumors surrounding the sale of LGD's 8.5th generation LCD panel factory in Guangzhou have been circulating in the industry for some time, yet the identity of the potential buyer has remained uncertain.
In March, companies such as BOE, TCL China Star, and Skyworth were all rumored to be potential suitors for LGD's factory. According to reports from South Korean media outlet Sedaily on April 2nd, LG Display has decided to sell its Guangzhou LCD factory through an auction process and plans to conduct the auction tender by the end of this month, with BOE, TCL China Star, and Skyworth among the three companies shortlisted.
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Looking at the analysis, it's clear that all three companies have some motivation for acquisition. For BOE, acquiring LGD's factory would strengthen its global competitiveness in the LCD panel market and further enhance its market share. As for TCL CSOT, since Samsung has certain panel procurement needs from LGD and TCL CSOT has a close relationship with Samsung, acquiring LGD through TCL CSOT would help ensure the stability of LCD panel supply for Samsung. For Skyworth, being a shareholder of LGD's Guangzhou factory, acquiring this facility would be advantageous in establishing a vertical integration operating model similar to TCL's "panel-to-device."
However, there are also concerns for each of the three companies in the acquisition of LGD's Guangzhou factory.
TCL CSOT's issue lies in the fact that Skyworth, as one of LGD's shareholders, may not agree to TCL CSOT's acquisition. After all, Skyworth and TCL compete directly in the television market. If Skyworth were to acquire LGD's factory itself, it would need thorough justification. After all, the panel industry requires heavy investment, has long cycles, and slow returns. Merely having an 8.5-generation line isn't enough to ensure future competitiveness. If an acquisition were to happen, substantial funds would still be needed to explore new paths in the panel industry. Would Skyworth, which is thriving in the new energy photovoltaic sector, still venture into the panel sector on such a large scale? BOE is the most capable of acquiring LGD's Guangzhou panel factory. Whether it can acquire it depends on BOE's comprehensive assessment of the global LCD panel market and whether LGD's asking price is appropriate.
According to reports, industry insiders in South Korea suggest that the selling price of LGD's Guangzhou factory will be around 1 trillion won (approximately 5.35 billion CNY). If competition among companies intensifies, the selling price may be even higher. However, DingTech believes that such assessments may deviate from the actual situation.
LGD's purpose in selling this LCD panel factory is to raise funds for investment in the OLED panel industry. In the increasingly hot mid-size OLED panel market, LGD's current investment progress lags behind Samsung and BOE. With the release of the Apple OLED version iPad, the mid-size OLED market is expected to grow rapidly in the future. If LGD cannot quickly raise funds to invest in a new 8.6-generation OLED production line, it may be completely suppressed by its competitors in the next 5-10 years. In this context, it is unlikely that LGD will sell the 8.5-generation LCD panel line at a high price because compared to the acquirers, LGD is more urgently in need of cash.
Who will win the bid for LGD's Guangzhou 8.5-generation panel factory and how high of a price it will fetch remains to be seen. (DingTech original, reproduction must be attributed to DingTech)
