LG Display to Invest 1.36 Trillion KRW in OLED Growth

LG Electronics has formally announced its participation in a significant rights issue by LG Display, valued at 13.6 trillion Korean won (approximately 10.4 billion USD). The strategic move is designed to reinforce the competitive position of LG Display's Organic Light Emitting Diode (OLED) business.

In a press release on December 19th, LG Electronics disclosed the outcomes of a board meeting, confirming its decision to actively engage in the capital increase. The primary objective is to enhance the competitiveness of LG Display's OLED business while establishing a robust financial framework for sustained future growth.

As a substantial stakeholder in LG Display, holding a 37.9% share, LG Electronics has committed to a substantial investment of around 5 trillion Korean won in the aforementioned rights issue. This move follows LG Display's prior announcement of a 13.6 trillion Korean won rights issue, a proactive step aimed at securing crucial investment capital and stabilizing the company's financial structure.

Market analysts interpret LG Display's decision to pursue funds through a rights issue as a noteworthy development, marking its inaugural such initiative since going public. The impetus behind this move is attributed to an escalating debt ratio, soaring from 215% at the close of the second quarter of 2023 to 322.2% at the end of the third quarter. The global economy, having faced a downturn following the initial pandemic-induced boom, witnessed a sharp decline in demand for LG Display's primary product—OLED panels.

However, industry experts project a positive turnaround for LG Display, foreseeing a return to profitability in the fourth quarter of the current year. This anticipated reversal marks the conclusion of six consecutive quarters of financial losses and is underpinned by LG Display's successful procurement of contracts to supply panels for the latest iPhone and other Apple products.

In terms of revenue composition, the OLED business is anticipated to ascend from constituting 40% of LG Display's total revenue in the preceding year to 50% in the current year, with projections indicating a further increase to 60% in the subsequent year.