LG Display cuts capex; tablet boom hits LCD TVs
By Miyoung Kim
SEOUL (Reuters) - Flat-screen maker LG Display will slash next year's capital spending by a quarter as booming sales of mobile devices from iPads to Android smartphones saps demand for TV panels, its main source of earnings.
Mired in excess capacity for more than a year, the outlook has worsened for the global liquid crystal display (LCD) flat-panel industry, battering Samsung Electronics and LG Display, which together account for half of the global market.
The reduction by LG Display, the first major technology company to announce a sharply reduced spending plan for 2012, will take the company's capital expenditure to the lowest in four years.
TV makers are struggling with sluggish demand, forcing Sony Corp to cut its exposure in the TV panel business with Samsung and Sharp, while Philips is hiving off its loss-making TV business.
"LCD makers will keep 2012 investment plan conservative and LG is also likely to cut spending again as visibility is very low due to weak demand especially from Europe and the United States," John Soh, an analyst at Shinhan Investment & Securities, said on Monday.
"LG is likely to report losses widening in the current quarter and the outlook for the next nine months or so is dreadful due to weak PC and TV demand."
Weak demand for PCs and TVs are a big concern for LCD panel makers as the two products account for nearly 90 percent of large-sized flat-screen panels.
LG Display's smaller rivals, Taiwan's AU Optronics and Chimei Innolux Corp have cut their capital spending for this year. Continued...