On August 30 LG Display announced today that it started producing OLED TV panels at its 8.5-Gen OLED fab in Guangzhou, China. LGD hoped that mass production will begin shortly, but according to a new report from Korea the new fab's yields are low (50-60%) and actual mass production has not started yet.
LGD's new fab has a monthly capacity of 60,000 substrates, which will be expanded to 90,000 by 2021. The company has now lowered its OLED TV forecasts for 2019 as it did not meet its goal of starting shipping commercial panels in October.
The new Gaungzhou fab is similar to LG's current Paju OLED TV fab, and LGD believed it will ramp up very quickly. But the company also decided to adopt several new technologies in this new fab - ironically mostly to improve productivity, and these hasn't been stabilized yet. In addition LGD opted to use a new OLED stack (to improve efficiency and productivity at the same time).
LGD did issue a statement that confirms that the Gaungzhou output is lower than expected - but the company still hopes that by early 2020 its production rate will be as planned originally. One way to achieve that is to revert the Gaungzhou fab to use the same technologies as materials as the ones used in LG's existing line in Paju.
LG's Goungzhou fab was announced in 2017, but the company found it challenging to get approval from both the Chinese and Korean government - which it finally got in July 2018. The total investment in the new fab was about $4.2 billion. The new fab was established in a joint venture established between LG Display and Guangzhou Development District (GDD). LG Display holds a 70 percent stake in the JV.
LGD hopes that the new Chinese fab will enable it to cut production costs due to lower wages and government subsidies. DSCC estimates that the subsidies will reduce LGD's depreciation costs by 65%. An unexpected bonus may be that this fab could enable LGD to circumvent Japan's recent export ban on Korea.
LGD also aimed to implement Multi-Model Glass (MMG) in the new fab in China, to increase yields - but it is now thinking about postponing MMG implementation as well.