On March 13, 2009 LG Display (LGD) announced that it may resume reduction of LCD panel production if Taiwan-based competitors increase LCD production. The company stated a still-fragile market as the underlying reason for the potential move. Thanks in part to strong demand from China,Â LGD has recently recovered TFT LCD utilization rates to normal levels following significant reductions in late 2008. LGD CEO Young-soo Kwon remained cautious, “When Taiwanese makers increase production again, there could well be another round of output cuts.” He also mentioned that LCD panel “prices are not falling further, but it is difficult to expect a rise.” Unfortunately, large LCD TV panel prices are on the decline.
Philips has just completed its selloff of its equity share of LGD. Some have speculated that it might not be as easy to secure LCD TV panels as before. Kwon responded:Â “There will be no impact at all. We will have a stronger, business-focused relationship.” That’s a nice thing to say but I’m not completely convinced: if you just sold off a major equity stake at a company that supplies you significant quantities of LCD TV panels, should you expect the same level of support from that company. Probably not. You’ll need to work harder.