LG affiliate Silicon Works is upping the portion of China in its portfolio in a bid to survive amid hardcore restructuring at LG Display’s LCD business, according to industry sources on Oct. 6.
Silicon Works’ primary cash cow so far has been selling display driver ICs (DDI) for large-sized LCD panels. In particular, Silicon Works has been supplying more to CSOT. According to market research firm IHS Markit, CSOT depended 20% of its LCD DDI on Silicon Works in the second quarter of this year. This was bigger than the 10% in the first quarter.
BOE, the largest panel maker in China, also relied on Silicon Works for 5% of its overall demand. During the same period, 82% of the DDI orders placed by LG Display were filled by Silicon Works. Industry watchers say this ratio will remain solid for the time being, but that the absolute amount is bound to decline as more companies are cutting down on large-sized LCD production.
Samsung Electronics’ System LSI division is also increasing the portion of its Chinese and Taiwanese business, as Samsung Display plans to pare down its LCD business. As of Q2, AUO of Taiwan was depending 13% of its orders on Samsung’s System LSI division, while for Innolux, it was 15%. The department also supplied 5% of BOE’s orders and 15% of CSOT.
“These suppliers need to up their game, since most of them had it pretty easy supplying mostly to affiliates,” said one market source, adding that most display makers are restructuring their LCD lines, and are expected to gradually shut them down altogether, meaning that DDI manufacturers need to make corresponding changes to their business strategies
In the third quarter of this year, Samsung Display has halted its 8-1 phase LCD line at its Asan 1 Campus in South Chungcheong Province. In its place, the firm plans to build a QD OLED production line. Consequently, the LCD production capacity for Gen-8 panels will fall by a monthly 125,000 by the end of the third quarter.
LG Display will also halt some of its LCD production lines, with industry watchers predicting that some of the lines at the firm’s Gen-7 and Gen-8 lines in its P7 and P8 plants in Paju, Gyeonggi Province will shut down either at the end of this year, or early 2020.
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