Contract to Sell Guangzhou Factory Signed Last September
CSOT Takes Over Operations from the 1st
Sale Proceeds to Be Finalized Within This Month
LGD to Focus on Advancing OLED Business
China's largest home appliance company TCL has completed the acquisition of LG Display's Guangzhou liquid crystal display (LCD) factory in six months and has begun full-scale operation of the production line.
With this acquisition, TCL plans to accelerate its large-size LCD business, while LG Display intends to advance its organic light-emitting diode (OLED) business using the sale proceeds to be finalized within this month.
According to industry sources on the 2nd, TCL announced through its newsroom that LG Display's Guangzhou 8.5-generation LCD line was officially transferred to its display subsidiary CSOT (China Star) the day before. TCL stated, "We have completed the approval of the transaction and commercial registration procedures for the shares of LG Display's Guangzhou panel factory (CA corporation) and module factory (GZ corporation)."
Previously, LG Display signed a contract in September last year to transfer its shares in the Guangzhou large-size LCD panel and module factories to CSOT. The sale price was reported to be 10.8 billion yuan (approximately 2.03 trillion KRW). CSOT secured 100% ownership of the Guangzhou factory by acquiring LG Display's 80% stake and the 20% stake held by the Guangzhou local government in January. Including this acquisition, CSOT now owns two 6-generation, four 8.5-generation, one 8.6-generation, and two 10.5-generation LCD production lines.
TCL also added that it will rename the Guangzhou factory, previously owned by LG Display, as 'T11.' TCL plans to focus on the large-size LCD business for TVs through the T11 production line. Based on the increased capacity, the company aims to gain an advantage in both domestic competition with Chinese companies such as Xiaomi and Hisense and in the global market.
TCL stated, "The monthly production capacity of the panel production line at the Guangzhou factory is 180,000 units, and the module production line, responsible for post-processing of panel production, has a capacity of 2.3 million units, with both quality and profitability being favorable." The company added, "We will strengthen product, technology, and ecosystem (market) advantages through improving the efficiency of the T11 production line and research and development."
Market research firm TrendForce predicted that with this Guangzhou factory acquisition, CSOT's global large-size LCD market share (by area) will expand from the existing 19.3% to 22.9%. It further analyzed, "CSOT's top priority, aiming to expand the ultra-large TV market, is to optimize the cost structure of T11, plan new product lines, and secure a stable customer base," adding, "T11 may also play an important role in expanding the IT panel business such as monitors."
LG Display has completely exited the large-size LCD business by stopping domestic production of LCD TV panels at the end of 2022 and disposing of the Guangzhou factory. LG Display plans to accelerate securing competitiveness in the OLED business as soon as the sale proceeds are finalized. TCL's sale price confirmation is expected within this month, and the amount is anticipated to exceed initial expectations.
Kim Seong-hyun, LG Display's Chief Financial Officer (CFO) and Vice President, said at the shareholders' meeting held last month, "I mentioned during the conference call in October last year that the 2024 business results would be reflected in the final sale price, so the final settlement amount would not decrease." He added, "Based on the settlement details up to February, the sale price is expected to increase somewhat, and the exact amount will be calculated by early April."
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