Panel manufacturers have suffered in the last few years thanks to a combination of factors. One of these is increased competition, typically from Chinese companies able to manufacturer LCD panels at a cheaper price than most of the established competition. This increased competition has seen companies such as Sharp redevelop and refocus the business multiple times only to be bought out. Another reason why the business is changing is because OLED, organic light emitting diode, display panels are rising in popularity but currently manufacturing is concentrated around one business, Samsung: other companies are increasing their exposure to OLED technology but it takes months if not years to establish production lines. Another reason is that sales of smartphones and tablets, two main users of small scale panel technologies, is stagnating. There is still sales growth in these areas but it tends to increase competition between the handset manufacturers, which in turn puts pressure on the components used in these devices. This pressure drops through to component manufacturers, who are being squeezed to supply panels at lower prices.
LG Display is one of the world's largest display manufacturers and we've already seen reports of how the business is expanding by commissioning new factory production lines, mostly for OLED technology and in LG's case, it's POLED (plastic organic light emitting diode) technology, which is easily made flexible. This week the company has been talking about sales and changes within the business designed to improve profitability. LG Display's Chief Executive Officer, Han Hang-beom, reported that he had seen evidence of an improvement in the late second quarter. He elaborated by explaining that LG Display had been making cost saving changes to the business and that it'll "look a bit better in the second half." The company is seeing its business pick up. LG's observations mirror those of research house IHS, which has reported that limited panel prices for televisions, tablets and monitors have started recovering in June.
A recovery should be good news for LG, which according to analyst forecasts is expected to post a 96% fall in operating profits in the second quarter. LG has been hurt by a slowdown in the sale of Apple's iPhone, which uses a LG LCD panel. The business should increasingly benefit from the sales of OLED technology and the Chief Executive reported that the company is preparing to supply the technology to "major" Chinese clients, destined for mobile devices - but was not able to elaborate. LG Display will deliver its second quarter earnings on the 27 July, where the market will perhaps be more interested in any recovery in the market rather than how sharp LG Display's profits have fallen in the second quarter.