LG Display’s “win-win technology cooperation fund” has emerged as an incubator that develops materials, parts, and equipment suppliers within South Korea’s display industry. As one beneficiary company has already succeeded in going public when LG Display introduced the fund just five years ago, the fund is being established as a strong foundation that helps growth of outstanding small and medium-sized enterprises.
According to the industry on Thursday, P&H Tech that specializes in OLED materials will be listed on KOSDAQ on February 16. The offering price has been set at $16 (18,000 KRW) that exceeded the upper range of company’s desired price. This indicates that the market has high expectations on the company’s technologies.
“P&H Tech has been receiving support from LG Display’s fund since 2018.” said one industry official. “Even in 2020 when it was difficult to secure a liquidity, the company was able to receive help from the fund and it has become the fund’s first beneficiary company to go public.”
LG Display set up a $35.8 million (40 billion KRW) fund in 2015 for its primary partners. It had lent funds with no interests to its primary partners for investment in facilities, development of new technologies, and research and development (R&D) after evaluating their applications.
In 2017, the company announced a “new growth cooperation system” that expanded eligible candidates of the fund so that 2,000 or so secondary and tertiary partners can also receive support from its fund. It also increased the value of the fund from $35.8 million to $89.4 million (100 billion KRW). Eliminating a vertical network that was formed within its primary, secondary, and tertiary partners and creating a horizontal win-win ecosystem has been the goal of the fund.
It has been recorded that LG Display had paid $82 million (91.7 billion KRW) to 51 partners between 2015 and the end of January this year. In other words, the company had paid about $16 million (17.9 billion KRW) on average to each partner for the past five years. It is expected that the total payment will surpass $89.4 million this year for the first time.
In addition to providing financial support, LG Display will also push for various programs such as joint R&D, manufacturing innovation, and bidding system of new equipment. It will attempt to stabilize its partners’ managements and strengthen their technological competitiveness at the same time as reorganization of GVCs (Global Value Chain) are being changed rapidly.
First, the company plans to be part of 20 joint studies this year. In 2019, it was involved in 21 joint studies and 595 manufacturing innovation processes. It plans to help its partners with patent application of excellent technologies that they find during their joint studies. It is expected that a number of beneficiary companies that are looking to go public through their excellent technologies just like P&H Tech will start to go up.
“As South Korea’s display industry has started to make a transition from LCD to OLED recently, there is a growing need to develop materials, parts, and equipment suppliers that are part of the industry.” said one official from LG Display. “We will continue to strengthen our cooperation system in order to improve our partners’ competitive edge in manufacturing.”
Staff Reporter Yun, Heeseok | pioneer@etnews.com