LG Display (034220.KS) significantly improved profitability in the first quarter this year through a premium strategy centered on organic light-emitting diode (OLED) displays. The company plans to reinforce its premium strategy with annual investments of more than 2 trillion won in new technologies, while simultaneously cutting costs through workforce restructuring, in preparation for concerns over deteriorating earnings caused by chipflation (a surge in semiconductor costs) and the prolonged Middle East conflict.
LG Display said Tuesday that its first-quarter consolidated operating profit was preliminarily tallied at 146.7 billion won ($107 million).
The figure represents a 338.4% increase from 33.5 billion won in the same period a year earlier and marks the largest first-quarter profit since 2021. Revenue fell 9% to 5.534 trillion won, reflecting seasonal off-season effects.
The improved profitability was driven by an expanded share of OLED sales. Unlike liquid crystal displays (LCDs), where price competition with Chinese manufacturers is fierce, the OLED market is centered on quality competition, where LG Display leads the industry. The company's OLED revenue share stood at 60%, up 5 percentage points from a year earlier. Accordingly, the selling price per panel area also rose 55% over the same period.
LG Display is expanding its business from large OLEDs for TVs to small and medium-sized OLEDs for information technology (IT) devices such as smartphones, laptops and tablet PCs. Apple is preparing to launch its first OLED MacBook this year, and the smartphone market is being restructured around premium products that can absorb higher semiconductor costs, which is increasing the OLED share in the displays they use. In line with this, LG Display decided the previous day to invest 1.106 trillion won in small and medium-sized OLED infrastructure. Capital expenditure (CAPEX) this year is planned in the mid-to-high 2 trillion won range, 1 trillion won more than last year.
LG Display, which has posted losses for three consecutive years since 2022, is staking its future on a recovery in profitability. Despite the strong first-quarter performance, concerns have grown over deteriorating profitability in the second half as raw material and fuel costs rise sharply due to chipflation and the Middle East conflict. "Given macroeconomic uncertainty, we believe we need to approach market changes more cautiously in the second half," LG Display Chief Financial Officer Kim Sung-hyun said.
In response, LG Display is pursuing an OLED-focused business realignment along with line upgrades, including artificial intelligence (AI)-based improvements in panel defect detection rates. The company is also implementing a voluntary retirement program, aiming to reduce non-core business units such as LCDs and cut labor costs. "We are attempting to transform into an OLED-focused company and are pursuing business restructuring accordingly," Kim said. "It is an essential process for enhancing the company's long-term sustainability."
