Apple display maker LG Display supposedly faces an “uncertain outlook” after posting its second quarterly loss, based on falling prices for its services.
As a result of the disappointing earnings, LG has cut investment plans by $2.7 billion for the period through 2020. In an earnings call, LG’s CFO Don Kim blamed “uncertainty around the mobile market” for the firm’s decision.
This uncertainty involves both oversupply of smartphones panels, and worries about the burgeoning trade war between the United States and China. Yesterday, we reported how Apple’s iPhone — which has displays built by LG — might get caught up in the new tariff system, with potential charges being levied in both China and the U.S.
Although LG said that it plans to cut investment BY $2.7 billion, it didn’t reveal how much it will be spending in total. However, it will supposedly not impact the shift from LG’s previous focus on LCD panels to next-generation OLED displays. This means that the cuts will be mainly to LCD operations.
LG Display is facing challenges
“LCD industry is already in a down-cycle, which will be difficult for LG to get away from, so LG will concentrate more on OLED to differentiate,” John Ko, an analyst at NH Investment & Securities, told Reuters.
Overall, LG Display posted an operating loss of 228 billion won ($202.1 million). This was less than the average forecast 247 billion won expected by analysts. Revenue for the April to June quarter fell by 15 percent from this time last year.
Apple recently ordered more than 24 million iPhone displays from LG for its 2018-era iPhones. The company will supposedly supply around 20 million LCD panels for the new 6.1-inch iPhone, along with 4 million OLED panels for a flagship model. It is also supposedly poised to take over from Samsung as Apple’s primary OLED display maker with next year’s iPhone refresh.
Whether that will change following LG’s recent bad news remains to be seen.