LG Continues Apple Watch Series 5 Display Production Despite Huge Loss

LG Display will continue producing displays for the Apple Watch despite huge losses in production, reports claim.

South Korean display manufacturer LG Display has been suffering from widening losses and is considering shutting down its E2 OLED display factory located in Paju, Gyeonggi Province, The Investor reported. This factory is where the display company produces 4.5th-generation flexible OLED displays used for smartphones and smartwatches, including Cupertino’s Apple Watch.

Among the three manufacturing lines at the E2 plant, only one line is in full operation, working on displays for use in the Apple Watch. At full throttle, this manufacturing plant is capable of producing around 20,000 OLED displays for the Apple wearable.

Widening losses

LGD revealed that its operating losses reached 501 billion won ($421 million) in the first half, Patently Apple reported. Specifically, the company lost 369 billion won and 132 billion won in the first and second quarters, respectively.

These losses led to LGD CEO Han Sang-boom, who led LGD since 2012, to resign from his position at the company, the Korea Herald reported. LGD became the world’s top large-size LCD panel maker in terms of sales and market share during Han’s leadership. Chinese LCD makers, however, caused LCD prices to fall over the years, causing LGD to suffer from quarterly deficits since 2018.

Aside from losses in the LCD segment, LGD also suffered from operation losses in the OLED segment. Small- and mid-sized OLED panels, which LGD manufactures in the E2 plant, have generated operating losses over the years. These losses are often blamed at the company’s failure to invest early in the OLED smartphone segment.

“The outgoing CEO Han Sang-Boom, who began to lead the firm in 2012, had put too much emphasis on improving the figures during his early years as CEO, while neglecting emerging businesses, like smartphone displays,” a source who spoke to the Investor said on the condition of anonymity.

Sources said LGD will likely transfer production of OLED displays to other plants once E2 is shut down. The Korean display manufacturer is expected to transfer production to other plants such as the E5 plant where it produces OLED panels for smartphones and cars.