April 25, 2024

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[THE INVESTOR] The Korean government on Dec. 26 approved LG Display’s plans to build its first overseas OLED production plant in China -- after a delay of almost five months.

The Ministry of Trade, Industry and Energy said it has decided to approve the plans on the conditions the Korean display maker initiates further investments in Korea, including increasing the use of Korean-made parts and equipment. 

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Currently, Korean display makers secure 30 percent of materials and 60 percent of equipment locally. The ministry urged LG to elevate that to 50 percent and 70 percent, respectively.

The ministry said LG had agreed to accept the conditions that also include toughened measures to prevent technology leaks.

The final approval will be delivered when specific actions plans for the required conditions are submitted.

The technology for organic light-emitting diodes is one of the nation’s designated key technologies and receives state subsidies, so any plans for building a plant overseas require government approval.

On July 25, LG asked for the government’s permission to build its first overseas OLED plant worth 5 trillion won (US$4.65 billion) in China. But the decision has been being delayed largely due to possible tech leaks to Chinese competitors.

The new Chinese plant is expected to produce larger OLED panels for TVs, while those in Korea focus on smaller OLEDs for mobile devices.

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