Samsung Display and LG Display are facing two different feelings as they are about to show how they did in first quarter. Range of operating loss for Samsung Display’s LCD Display has gotten wider than initial expectation as reduction of yields coincided with changes in LCD process. On the other hand, it is estimated that range of operating loss for LG Display has gotten smaller significantly due to reflective effect from earthquake in Taiwan and problems regarding yields for its competitors.
However it is predicted that both businesses will overcome their poor performance in first quarter and rebound again in second quarter.
According to stock industry and related industries on the 4th, it is predicted that both Samsung Display and LG Display both recorded significant loss in LCD businesses in first quarter and made operating losses based on quarterly standard. Although downward trend of average sales price of LCD has become slower starting from end of last month, they still had poor performance in first quarter as range of reduction was huge throughout first quarter.
Because yields of LCD have decreased temporarily for Samsung Display as it changed thickness of glass substrate to 0.4T and introduced a new process that decreases number of uses of masks to its lines in Suzhou, operating loss for Samsung Display has gotten bigger.
Stock industry is estimating that Samsung Display’s LCD business’s operating loss in first quarter will be at least $174 million (200 billion KRW) and at most $521 million (500 billion KRW). Overall reduction of panel industries such as reduction of prices of panels, reduction of shipments of large panels and others had had effect on its performance. Fact that it decreased thickness of glass substrate and number of (photo) mask processes to reduce production cost of LCD actually reduced early yields and impacted its performance even more.
Although it was estimated that LG Display will record an operating loss of about $174 million (200 billion KRW) in first quarter, it seems that it will actually make lesser operating loss at $86.8 million (100 billion KRW). Fact that sales of panels for OLED TVs increased and that performance of high-added value products was good as sales of RGBW UHD panel ‘M+’ has started to look up had positive effects.
A reason why range of loss has decreased is because downward trend of price of LCD has become better more quickly than expected. Industries believe that set manufacturers had received psychological impact from orders of panels due to earthquake that occurred in Taiwan and that problems regarding yields of LCDs for Samsung Display had had an effect on formation of prices of all LCD panel markets.
Stock industry is predicting that LG Display will make a small amount of operating loss in second quarter and start making surplus in third quarter. Although it is predicted that sales of panels for mobile devices will be significantly lesser this year than last year as more Smartphones start to select OLEDs, stock industry believes that LG Display’s strategy in increasing percentage of high-added value products such as panels for large OLED TVs, M+ and others will start to take effect.
Samsung Display is also estimating that its loss in first quarter will convert to surplus again in second quarter because it expects that problems regarding yields will stabilize and that prices of panels will start to increase slowly.
Staff Reporter Bae, Okjin | withok@etnews.com
