For LG, PDP Restructuring Has Just Begun

This newspaper found out on May 17 that LG Electronics will not sell its plasma display panel (PDP) business. Instead, LG has a plan to shut down its A1 plant, the firm’s oldest production line, for performance improvement reasons.

The A1 plant, built to mass-produce 40-inch PDPs in March 2001, was the first PDP production line for LG.

An industry insider said, “The closure of the A1 plant is an effort to streamline outdated facilities, which have weakened the company’s performance.”

This measure is the decision of Nam Yong, the vice chairman of LG Electronics, who has closely looked into returns on investment and efficiency, and who has tightened the firm’s budget.

Another official in the electronic industry said, “Due to weakening worldwide PDP demand, the A1 plant had become a ‘useless asset.’ This move is a streamlining of production to sustain PDP viability.”

Poor performance in the PDP sector had incurred LG’s Digital Display division 146.7 billion won in operating losses in the 4Q, 2006, and a 194.3 billion won loss in 1Q, 2007.

This represents a heavy burden on LG Electronics as the display segment has been chipping away at the money the company earned from its mobile and consumer electronics businesses over the same time periods.

The firm’s vice chairman said at the investor relations (IR) meeting last month, “PDP is one of the firm’s most important sectors. Many plans to reinvigorate the sector are under consideration.” His remark showed the company’s willingness to improve the segment and not to give up.

Kang Shin-ik, an LG vice president, said, “In the 50-inch panel market, PDPs will sell more than liquid crystal displays (LCDs),” indicating a selective and focused strategy.

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