April 24, 2024

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[THE INVESTOR] LG Display on Nov. 30 approved a funding plan worth 1.19 trillion won (US$1.10 billion) for the expansion of its Vietnamese module plant, apparently in a preemptive move to reduce risks from the government’s delayed approval for its first OLED plant in China.

When panels are produced, the module plant assembles them before shipment. Even though its plans for Chinese production has not yet been approved, the display maker seems to have started preparations in Vietnam.

The funding plan for the Vietnamese unit, LG Display Vietnam Haiphong, comprises of US$600 million debt and US$500 million capital increase. Considering the uncertainties surrounding regulatory approval, the company has decided to carry out the plan in phases over the next four years.

In July this year, LG Display asked for the government’s permission to build its first overseas OLED plant worth 5 trillion won in China. OLED is one of the nation’s designated key technologies that receive state subsidies so any plans for building a plant overseas should get government approval.

A government panel has delayed its decision for months citing possible tech leaks to Chinese rivals. During the period, concerns are also growing that the display maker could lose the right timing for OLED investments amid surging demand and fierce competition with rivals.

The firm says the planned Chinese plant will focus on producing larger OLED panels for TVs. Sources say the Vietnamese expansion is also aimed at responding to the increased TV panel production.

The government’s decision is expected to be announced this month.

By Lee Ji-yoon (jylee@heraldcorp.com)