TCL Technology’s subsidiary, TCL China Star Optoelectronics Technology (CSOT), has revealed its bold intention to acquire a substantial share of LG Display’s (LGD) operations in China.
Acquisition Details
The plan involves purchasing 80% of LG Display (China) Co., Ltd. (LGDCA) and 100% of LG Display (Guangzhou) Co., Ltd. (LGDGZ) for a base price of CNY 10.8 billion ($1.512 billion).
Strengthening Market Position
This acquisition is poised to significantly enhance TCL’s position in the global display market. The 8.5-generation facility in Guangzhou primarily produces large LCD panels, particularly for televisions. It is projected to manufacture approximately 14 million units in 2024, with a focus on panels sized 55 inches and larger. By obtaining these assets, TCL CSOT will not only boost its production capabilities but also solidify its role as a leading player in the large-sized LCD panel sector.
With this move, TCL's market share is expected to increase, as CSOT’s stake in large-generation LCD production is anticipated to exceed 20%, making it the second-largest player in the field worldwide. By 2026, CSOT's share is forecasted to reach 23.9%, enhancing its competitive edge next to industry leader BOE, which currently commands 27%. Together, these two Chinese companies will hold a significant share of the global LCD market.
Strategic Shift for LG Display
For LG Display, this agreement fits into its larger strategy of moving away from the crowded LCD market to concentrate on its more lucrative OLED business. OLED technology has surfaced as a growth opportunity, especially in high-end display markets, and LGD aims to bolster its leadership in this area.
The divestiture of its LCD assets in China provides LG Display with crucial funds to stabilize its finances after enduring several quarters of losses attributed to falling demand for LCD panels in electronic devices. This transition from LCD to OLED signifies a strategic pivot for LG Display, allowing it to remain competitive in a fast-changing market. By relinquishing its LCD operations, LGD can redirect more resources toward OLED technology, which is anticipated to enhance profitability as consumer demand for high-quality displays grows.
Challenges Ahead
However, this aggressive expansion may face hurdles. A significant number of LG Display’s South Korean clients overlap with CSOT’s current customer base, which could lead to shifts in supply chains as brands such as Samsung Electronics and LG Electronics might look for different suppliers.
