On August 2019 LG Display announced today that it started producing OLED TV panels at its 8.5-Gen OLED fab in Guangzhou, China. But in October it was reported that LGD's yields at the new fab were still low (50-60%) and mass production did not start as planned.
A new report from Korea suggests that LGD still did not manage to stabilize the new fab, and mass production is now delayed to after the first quarter of 2020. LGD's original plans were to produce around 5.5 million OLED in 2020, but that plan assumed the Guangzhou fab will be in full production rate by the end of 2019. LGD already lowered its 2019 OLED TV production capacity due to the Guangzhou delay.
LGD's new fab has a monthly capacity of 60,000 substrates, which will be expanded to 90,000 by 2021. 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 (including MMG, which seems to be the most challenging technology and the main cause of the low yields), 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).
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, government subsidies and the new technologies used . 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.
