LG Display bets on high-end OLED lineup to weather 'chipflation'

LG Display appears well-positioned to ride out "chipflation" — the phenomenon in which rising semiconductor prices push up the cost of finished products — by anchoring its business around high-value OLED panels. Since CEO Jeong Cheol-dong took the helm in late 2023, the company has moved decisively to build a premium-focused OLED lineup. Analysts say the strategy is paying off as demand for premium smartphones and televisions remains resilient.

Memory chip prices for smartphones surged as much as 200 percent year-on-year in the first quarter, according to market research firm TrendForce. As a result, memory's share of total smartphone bill-of-materials costs jumped from the previous 10–15 percent range to as high as 30–40 percent.

Yet the demand slowdown is not uniform across all product segments. Industry observers say a widening gap is emerging between budget and premium devices.

Global smartphone sales data for the first quarter showed Apple's shipments actually rose 10 percent year-on-year. Market research firm Omdia projects iPhone shipments will climb about 7 percent this year compared with last year. The television market tells a similar story: although memory's share of total TV production costs has expanded from around 3 percent to as much as 20 percent, demand for OLED TVs has remained steady.

Against this backdrop, LG Display's high-value OLED lineup is drawing attention. The company is targeting the high-end smartphone market with LTPO (low-temperature polycrystalline oxide) OLED panels. In the premium TV segment, its W-OLED panels — which LG Display developed as a world first — held an 82 percent share of the OLED TV market last year.

The push to restructure the OLED lineup gained momentum after Jeong's appointment in late 2023. Drawing on his deep understanding of OLED panels and technical expertise, the company has been strategically strengthening the development and production of high-value OLED products.

The shift toward an OLED-centered business structure is reflected in the numbers. OLED sales accounted for 61 percent of total revenue last year, a record high, up from the low-to-mid 40 percent range in the early 2020s. The company maintained that share at 60 percent in the first quarter, sustaining its OLED-first strategy.

Even amid a challenging business environment this year, LG Display is expected to post a full-year profit. "The second quarter is likely to see a temporary earnings dip due to one-off factors, but the annual recovery trend should remain intact as the mobile OLED peak season and improving profitability in large-panel OLED converge in the second half," said Jeong Won-seok, an analyst at iM Securities.