LG Display’s new OLED Fab in Guangzhou, China faces mounting delays with mass production now not expected until the second quarter of 2020 at the earliest.
There have been numerous reports of the delays facing LG Display’s newest 8.5 Gen OLED panel production facility, often followed by a ‘we’ve got it sorted now’ statement giving the impression that things were starting to get back on track.
However, the latest comments coming out of the display industry seem to point to a downturn in expectations for the Guangzhou factory again as equipment issues, low yields and now the Covid-19 coronavirus all conspire to delay production of the expected 60,000 substrates per month, which was planned to rise to 90,000 per month as production ramped up.
April 2020 is seen as the absolute earliest that meaningful substrate numbers will be produced.
With cases of coronavirus infection on the rise in South Korea, the local Chinese authorities informed LG Display that its South Korean employees would have to face a 14 day quarantine period. Given that this would increase delays, an appeal to the authorities resulted in a change of policy such that workers could be allowed in the factory provided they took the necessary individual precautions. Since the facility is a joint venture between LG Display and the Guangzhou Development District, it’s in the local government’s interest to get the factory up and running as soon as possible to benefit the local economy as well as supply Chinese TV manufacturers such as Skyworth and Conca who are waiting for their OLED screens from the plant.
Proposed back in 2017 but held up by bureaucracy until its greenlight in July 2018, the Guangzhou manufacturing plant was seen as important to provide the production facilities to support LGD’s ‘OLED first’ business strategy. The plant was due to open at the end of August 2019 and commence mass production by the end of the year but a series of problems soon meant the company had to put back its schedule.
Some of these issues, such as the low yields, were a result of changes in both equipment (which was supplied by Chinese firms rather than the usual Korean firms used in LGD’s Paju factory back home) and new manufacturing techniques which were designed to be more efficient but which have taken longer to stabilize than anticipated. On top of that, LGD opted to use a new OLED stack to improve efficiency and productivity.
Another reported problem is one related to the encapsulation process, which is a finishing stage designed to increase longevity of the display by excluding damaging elements such as moisture and oxygen. Several samples sent from the Guangzhou facility to LG Electronics have reportedly failed the quality check and this poor encapsulation is yet another headache for LG Display.
Industry analyst IHS Markit recently downgraded its expectation of total OLED TVs produced in 2020 from 5 million to 4.5 million and there’s now a reason to anticipate that figure will drop further as the delay extends, such is the reliance on LG Display's production capacity.
The peak of over 1 million OLED TVs sold in the final quarter of 2019 indicated that the TV buying public is increasingly interested in OLED and with LG Display’s many clients, including Vizio, Xiaomi, Panasonic and Sharp, ready to tap into that interest with their new OLED ranges, including the brand new 48-inch screen size models from LG Electronics and Sony, the pressure is undoubtedly on for LGD to get the Guangzhou Fab up and running as soon as possible.
So, if you’ve been waiting for a brand new OLED TV from one of this year’s ranges, you might have to be prepared to wait a little bit longer.