Recently, TCL Technology issued an announcement, announcing that its holding subsidiary TCL Huaxing has become the preferred bidder for the equity of LGD's 8.5-generation LCD factory in Guangzhou.

According to TCL Technology, the assets that TCL Huaxing intends to acquire are 70% equity of LG Display (China) Co., Ltd. and 100% equity of LG Display (Guangzhou) Co., Ltd.

01 LCD in China

Among them, LG Display (China) is LGD's 8.5-generation LCD (liquid crystal) panel factory, mainly producing large-size TV panels with a production capacity of nearly 200K. LGD directly and indirectly holds 70% of its shares, and Shenzhen Skyworth-RGB Electronics Co., Ltd. holds 10% of its shares. In 2023, the company's revenue was 6.334 billion yuan and its net profit was 602 million yuan. As of the end of 2023, the total assets of the LGD Guangzhou panel factory were 13.327 billion yuan and its net assets were 11.802 billion yuan.

LG Display (Guangzhou) is a module factory with revenue of 11.86 billion yuan and net profit of 536 million yuan in 2023. LGD holds 100% of its shares. As of the end of 2023, the company's total assets were 21.125 billion yuan and its net assets were 2.839 billion yuan.

02 Announcement about the transaction

The announcement pointed out that TCL Huaxing will conduct exclusive negotiations with the seller on the transaction and agree on a transaction agreement. If a final transaction agreement is reached, TCL Huaxing is expected to acquire it with its own or self-raised funds. According to the acquisition equity ratio, the net assets of the asset package acquired this time are close to 10 billion yuan.

Some analysts believe that once the above transaction is completed, TCL Technology is expected to become the takeover party of LG Display's domestic business, and the panel industry pattern will be further detailed.

From the perspective of the global display industry, the acquisition will further consolidate the dominant position of Chinese mainland panel factories in LCD panels. According to Qunzhi Consulting data, in 2025, BOE and TCL Huaxing will account for more than 50% of the global G5 and above LCD production capacity area, reaching 52.6%, and the overall Chinese mainland manufacturers will account for 72.7% of the global LCD panel supply. With the increase in production capacity, the global LCD panel supply pattern will also be rewritten.

03 Histroy of the acquiry

In fact, since the beginning of this year, there have been constant rumors that LGD plans to sell its Guangzhou LCD panel factory to Chinese panel companies. TCL Huaxing and BOE, the two leading domestic panel companies, are potential acquirers.

Some analysts pointed out that whether in terms of factory technology, customer resources, or strategic complementarity, TCL Huaxing and BOE have sufficient reasons to compete for LGD's Guangzhou factory. Korean factories such as LGD and Samsung Display are accelerating their exit from the LCD panel market.

According to news in June this year, LG Display plans to withdraw from the Gumi M3 (module) production facility by the second half of this year. The withdrawal of the M3 factory, which produces small LCD modules for notebook computers, etc., is due to the weakening competitiveness of LCDs and the reorganization of the business structure centered on OLEDs.

View more at EASELINK