LG Group Ramps Up Presence in LCD Substrate Field

Plans to invest 800 billion won to build the second and third substrate production expansion lines in 2012

The LG business group is strengthening its presence in the global liquid crystal display (LCD) substrate market. LG Group, which has made a strong showing in the global electric vehicle battery business under the initiative of Chairman Koo, is moving to make another massive investment in the LCD substrate field.
Starting this past June, LG Chem has been test-operating the first glass substrate production line at the Paju Industrial Complex. The glass substrate production line will go into commercial operation in the first half of 2012 to mass-produce substrates for use for an eighth generation LCD production line.
The company plans to invest 800 billion won next year into build the second and third substrate production lines.
LG Chem originally had a plan to build three glass substrate lines with an annual production capacity of 17 million square meters by 2012, but has delayed it due to a slump in the global display market.
An LG Chem official said the production rate of the upcoming first substrate production line in Paju cannot be revealed, but the figure will go up during the next half when it is put into commercial operation.
In 2009, LG Chem began to expand its business environs into the substrate field by importing a substrate manufacturing technology from SCHOTT of Germany.
The global substrate market is dominated by the U.S. company Corning (inclusive of Samsung Corning Precision Materials, a joint venture between Corning and Samsung Electronics), Asahi Glass, and Nippon Electric Glass (NEG). The major substrate makers' technology domination makes it difficult for each newcomer to enter the market on its own. SHOTT is distancing itself from the substrate business after it handed over the substrate manufacturing technology.
Substrate takes up the biggest share among the major components for producing LCD panels in terms of pricing. Samsung Corning Precision Materials is the supplier of substrate to Samsung Electronics, while LG Display buys the component from Paju Electric Glass Co. (PEG) as well as Samsung Corning Precision Materials.
PEG, a joint venture established in 2005 by LG Display and NEG at a ratio of 40:60, churns out substrates for seventh and eighth generation LCDs.
If LG Chem mass-produces substrates for eighth generation LCDs, LG Display's dependence on PEG will wane. The move is construed as LG Group's strategic vertical integration of major components similar to the way Samsung Electronics does, according to industrial analysts.
The success of LG's substrate business depends on how much it can lower production costs and enhance its substrate production rate, they said. LG's substrate business is based on the "floating" manufacturing method, compared to Samsung Corning Precision Materials' "fusion" method.
LG Chem plans to invest a combined 3 trillion won by 2018 to set up seven substrate production lines for LCDs.
LG Group's foray into the substrate sector is expected to ramp up competition among substrate makers, lowering LCD makers' production costs.
Starting Nov. 1, each subsidiary of LG Group began to work out their 2012 business plan.
LG Group Chairman Koo plans to discuss issues such as strategies to overcome business uncertainties, investments for future growth, securing gifted manpower, and shared growth with the CEO of each subsidiary at upcoming meetings.
He is expected to urge the executives of each subsidiary not to spare themselves in R&D outlays in new businesses, personnel management, and shared growth, group officials said.. nw

LG Group Chairman Koo Bon-moo
Photo on courtesy of LG Group

LG Group Chairman Koo takes a look at his group's products on display at an LG executives' seminar in March.
Photo on courtesy of LG Group