LG Display to build OLED facility in Guangzhou

The Korean government on Tuesday gave LG Display the green light to build an organic light-emitting diode (OLED) TV panel production facility in Guangzhou, southern China, five months after the TV maker requested the government’s permission.

The approval came five months after LG Display, the sole producer for large OLED panels for TVs in the global market, submitted its application to construct an 8.5-generation assembly line for large OLED panels to better respond to growing demands for big high-end TVs in global markets. The operation will begin in the first half of 2019 at the earliest.

There had been concerns that the government might reject the request, as it took nearly five months for it to approve the plan, which industry watchers said was longer than expected.

The Ministry of Trade, Industry and Energy said in a press release that its committee, tasked with protecting domestic industry and technology, decided to “grant permission” for the electric maker to set up the plant in China, taking into account “positive effects it will have” on the economy such as “market expansion” and “job creation” as well as increased exports by LG’s contractors in Korea.

LG Display’s plan to build the OLED production facility was subject to government approval under the law since it is designated as one of the country’s key technologies that were developed with government funds and need to be protected from technology leaks.

LG is expected to inject at least 5 trillion won ($4.65 billion) into supplying the necessary equipment and parts to set up the Guangzhou factory.

But the Ministry said its permission was conditional on the TV maker increasing the use of Korean-made materials for its OLED panels manufactured in its Guangzhou plant, and that its subsequent investments should be made in Korea.

It also demanded that LG Display strengthen security levels at the envisioned facility to prevent key technology leaks.

The ministry said its approval will be declared “official” once it receives LG’s plan of actions on these conditions.

An official from the Industry Ministry said that the government already consulted with LG Display over these demands and gained its consent.

“We just need to receive the plan on a document as a formality,” said the official, who asked not to be named.

The panel maker pledged to speed up construction to meet growing demands. The company also said it will strive to expand the OLED TV market through its Guangzhou facility.

“We will also make investments and carry out hiring here in Korea,” the firm said in a statement.

BY KANG JIN-KYU [kang.jinkyu@joongang.co.kr]