South Korea’s LG Innotek is searching for a buyer for its key LED chip equipment and relocating the related staff as a part of its plans for paring down its LED chip business.
“A large part of the workforce at LG Innotek’s MOCVD division at the company’s Paju plant has been moved to the camera module plant in Gumi,” said one industry watcher close to the matter on Nov. 11.
He pointed out that MOCVD and camera modules have little in common. In fact, MOCVD is a key equipment for LED chip pre-processing.
Adding fuel to the speculations about the downsizing, the MOCVD in Paju are showing minimum operation rates. “To my knowledge, the MOCVD in Paju are close to showing 0% operation because for LG Innotek, it doesn’t make any monetary sense to keep the machines going,” said another source.
In 2018, the LG affiliate tried to sell the MOCVD equipment to a Chinese company, but succeeded in selling only half of the total amount. “It won’t be easy finding a buyer because most of the equipment is worn down,” said the source.
Another market source said that LG Innotek has already sent down memos to its LED resellers that it will receive orders for LED chips in some areas, such as for autos and lights, only until the first quarter of 2020.
Since last year, LG Innotek has been cutting down its LED production capacity to only around half of the levels compared to the year prior. Production facilities in Paju, China and Poland were also combined to just Paju and China.
Since 2008, LG Innotek’s LED business has posted accumulated losses of close to 1 trillion won. In the first half of this year, it once again recorded an operating loss on competition from China and a global glut in supplies.
Meanwhile, LG Innotek has proclaimed that it plans to streamline its LED business to focus more on value-added products and cutting out low-to-mid-tier businesses.
The Elec is South Korea’s No.1 tech news platform.
