LG InnoTek said on Wednesday that it was existing LED business.
It the first official confirmation from the company itself that it was doing so.
Last year in October, LG InnoTek has already decided to exit the LED business and told its retailers that it was planning to halt LED chip and package production.
On Wednesday, LG InnoTek said increased competition led to poor performance of the business.
It will restructure its operation and focus on core businesses instead, the company said. Remaining assets of the LED business will be offloaded and exiting the business will help the company’s financial structure in the long term, it said.
TheElec was the first to report in November, 2019 that LG InnoTek was planning to restructure its LED chip business. On December, 2019, TheElec was the first to report that LG InnoTek was planning to exit its LED business except modules for auto-components.
LG InnoTek’s decision to halt LED production in October last year has already caused a reshuffling of players in the South Korean LED sector.
Seoul Semiconductor has replaced LG InnoTek as the top supplier of LED for backlight units of liquid crystal display (LCD) TVs for LG Electronics.
Woori E&L has replaced LG InnoTek as the supplier of LED for LG Electronics for use in notebooks, tablets and monitors.
Seoul Semiconductor and Semicon Light has also increased the portion of ultraviolet (UV) LED they supply in that market from LG InnoTek exiting.
LG InnoTek will continue its automobile lighting module business, however. Affiliate LG Electronics have bought Austrian car lighting company ZKW for 1.4 trillion won back in 2018, which is likely the reason why LG InnoTek is keeping that operation.
LG InnoTek’s LED business had most 12 straight years of losses ever since the company was listed on KOSDAQ in 2008. For those 12 years, the business has accumulated 1 trillion won in operating loss. Last year, the LED business posted 326.7 billion won in sales, or 3.9% of LG InnoTek’s total sales.
The LED business will cease operations on December 31, 2020.
Last year, LG InnoTek also exited the high density interconnection (HDI) board business for smartphones, which was also posting losses.
Meanwhile, LG InnoTek posted 89.4 billion won in operating profits and around 2.23 trillion won in sales for the third quarter, a drop of 52.1% and 8.8%, respectively, year-on-year.
This was due to lower orders for camera modules from Apple due to the delayed launch of iPhone 12.
A LG InnoTek spokesperson said the COVID-19 pandemic has caused uncertainties in the market.