LG Display chief forecasts strong year

Kwon Young-soo, chief executive of LG Display Co., the world's second-largest liquid-crystal-display maker by revenue after Samsung Electronics Co., recently discussed the outlook for the flat-panel industry this year, where the company sees the industry heading in terms of technology and his vision for the company.

Mr. Kwon, 53 years old, previously served as chief financial officer of consumer electronics maker LG Electronics prior to joining LG Display in January 2007.

Jung-Ah Lee in Seoul recently spoke with Mr. Kwon at the company's headquarters. The following is a translation of the interview.

 

WSJ: What's the outlook for the global LCD market?

Mr. Kwon: There are a lot of positive signals on the demand side. The global economy is showing signs of a recovery and there's booming interest [for consumer electronics] especially with sporting events such as the Olympics and the upcoming World Cup soccer games.

Market demand for LCD panels will likely be slightly higher than previously expected. Although inventory levels at some TV set makers seem to be slightly higher than normal levels now, overall inventory isn't large after the Lunar New Year holiday.

Factory utilization rates at some LCD makers in Taiwan and in Japan haven't reached 100%, so it seems like it will be a pretty good year for the industry.

 

WSJ: What was LG Display's business performance like in the first quarter of this year and what's the outlook in terms of prices?

Mr. Kwon: Supply-demand conditions are favorable. Strong demand will likely continue so prices for panels are expected to stay firm [this quarter].

WSJ: Does LG Display have any plans to expand production capacity in light of the strong market?

Mr. Kwon: We are currently reviewing a plan to additionally expand capacity at our eighth-generation production line in Korea. [So-called 8G plants can produce panels bigger than 50 inches for televisions.]

The decision on the plan will be made after we get word from Chinese authorities on whether our investment in China will be approved. An already expanded second eighth-generation line will begin mass production in May.

 

WSJ: Do you expect LG Display will get the final approval from China to build a manufacturing facility there?

Mr. Kwon: I see no reason why the Chinese government would not choose us since we have good technology. However, there's a chance that only one Korean company [Samsung Electronics or LG Display] could get the go-ahead.

We can delay the expansion plan in Korea if China accepts our plan. [In late February, LG Display submitted a plan to invest $4 billion in a manufacturing plant in China.]

 

WSJ: Could there possibly be another supply glut this year given you and other LCD makers are looking to expand capacity?

Mr. Kwon: A slight oversupply may be possible, but it won't be huge like it was in the past.

That's partly because there's still a component shortage of glass. Glassmakers are managing their investment plan rather conservatively, which have largely contributed to their strong profitability. They aren't expected to make any massive investments going forward, and in that respect, a glass shortage will likely be sustained this year.

 

WSJ: What will be LG Display's future cash cow?

Mr. Kwon: 3D TVs will be the next revolution. Just like when color TVs were introduced to replace the black-and-white TVs. Consumers who already have a television set may even buy another 3D TV and boost television demand. Electronic-paper-display market will also grow rapidly.

All the paper books and newspapers will disappear someday and will be replaced by electronic books and electronic papers. We expect electronic book reader shipments to be around eight million units this year and that will likely double next year.

 

WSJ: Apple Inc. uses in-plane switching technology, which enables consumers to enjoy the same picture quality at any viewing angle, for its panels used in the iPad. Are you a supplier?

Mr. Kwon: We may be able to supply the majority of panels for the iPad. Apple may be in talks with other panel vendors as well, but since some of them don't have in-plane switching technology, I doubt that they can meet all of Apple's needs. As time flows, tablet PCs will draw a lot of attraction from users.

[An Apple spokeswoman declined to comment.]

 

WSJ: When was your most difficult time as chief executive?

Mr. Kwon: It isn't easy investing during a recession. When there was a severe LCD oversupply in 2008, we decided to invest both in eighth-generation and the sixth-generation plants [which can make panels bigger than 30 inches], which was valued at over four trillion won (US$3.44 billion).

Some raised concerns and even requested us to stop or delay the investment at that time, but I thought a crisis was an opportunity to boost our market share. That was a very difficult decision.

 

WSJ: When was the most rewarding time for you as CEO?

Mr. Kwon: When all those investments started finally paying off. We started seeing our fortunes change for the better in 2009 when we simultaneously started mass production from both our eighth- and the sixth-generation plants on the back of strong demand. We ran our factories at full capacity.