Apple supplier LG Display has reported a second straight quarterly loss, and is cutting its investment plans by $2.7 billion through 2020, due to its concerns about the mobile device market.
The cut underscores the bleak outlook for electronics makers and comes a week after another Apple Inc (AAPL.O) supplier, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW), also scaled back its revenue and investment estimates.
“It is a conservative approach resulting from uncertainty around the mobile market,” Don Kim, LG’s chief finance officer, told an earnings conference call, referring to the capex reduction.
LG shares fell 7% after it posted faster-than-expected panel price declines and an uncertain outlook. LG’s traditional LCD business continues to struggle with falling prices as Chinese competitors ramp up their production levels.
LG said its $2.7 billion investment cut wouldn’t affect its transition from LCD to OLED panel production. However, existing LCD production could be impacted.
The investment cut would not impact plans to “speed up the shift” from LG’s mainstay liquid crystal display (LCD) business toward next-generation organic light-emitting diode (OLED) panels, the company said.
Plans to invest about 20 trillion won in OLED panels by 2020 remained unchanged, meaning the cuts would apply mainly to LCD operations.
Apple is investing $2.67 billion in LG’s OLED panel production facilities, with LG said to be setting up a production line specifically for Apple’s iPhone display needs.
Apple is expected to debut two OLED iPhones in the fall, in 5.8 inch and 6.5 inch sizes.
