LG Display decided to convert its dedicated organic light-emitting diode (OLED) panel line for iPads to also produce panels for iPhones. This is because the demand for iPads equipped with OLED has been lower than expected.
According to the industry on the 23rd, LG Display recently decided to produce OLED panels for iPhones at its AP5 line in Paju, Gyeonggi Province, which was previously dedicated to producing OLED panels for iPads. As soon as the equipment adjustments are completed, production of OLED panels for iPhones is expected to start as early as the first half of this year.
After Apple first equipped the iPad Pro series with OLED last May, LG Display has been operating a dedicated OLED line for iPads for about a year. LG Display supplies OLED panels for both the 11-inch and 13-inch iPad Pro, surpassing its competitor Samsung Display to become the largest supplier.
Apple required a two-stack tandem structure where the OLED layer is stacked twice to enhance the durability of the iPad. LG Display was able to secure a favorable position as it has more mass production experience with the two-stack tandem than Samsung Display.
The problem is that the market demand for the iPad Pro has been lower than expected, causing the profitability of LG Display and Samsung Display's OLED business for iPads to fall short of expectations. Until the second quarter of last year, when the supply of iPad OLED started, the situation was not bad; however, from the third quarter of the same year, panel inventory began to accumulate.
Because the price of the two-stack OLED panels is high, the selling price of the iPad Pro was set too high, leading consumers to refrain from making purchases. The domestic selling price of the iPad Pro 11-inch model with 256 gigabytes (GB) is 1,599,000 won, while the 13-inch model is 2,099,000 won. The price share of the two-stack OLED panels is approximately $260 (about 370,000 won) for the 11-inch and approximately $315 (about 440,000 won) for the 13-inch.
According to market research firm Ubi Research, last year, the shipments of OLEDs for iPads were 3.46 million units for LG Display and 2.8 million units for Samsung Display, falling short of initial expectations (6 million units for LG Display and 4 million units for Samsung Display).
Given the circumstances, LG Display concluded that it is a better choice to produce OLED panels for iPhones, where demand is increasing, rather than continuing to operate the unprofitable OLED line for iPads. An industry insider noted, "Since the tablet panels supplied by LG Display are only for the iPad, their demand can greatly impact the company. Therefore, it is more efficient to produce OLED panels for iPhones, which are seeing increasing demand, rather than continuing to operate the unprofitable iPad OLED line."
Earlier, Kim Sung-hyun, Chief Financial Officer (Vice President) of LG Display, said during the earnings conference call in January that regarding the sluggish demand for OLEDs for iPads, "Uncertainties in the macroeconomic environment continue to delay the recovery of demand for IT devices overall, and poor sales of high-end products are being observed. We are reviewing various strategies to enhance operational efficiency in line with the market environment."