LG Display builds OLED factory in Vietnam to avoid possible China retaliation over THAAD

[Viet]

http://www.theinvestor.co.kr/view.php?ud=20170302000822

LG Display to spend W1tr for OLED production in Vietnam

• PUBLISHED :March 02, 2017 - 16:56
• UPDATED :March 02, 2017 - 16:56

South Korean display manufacturer LG Display will pour more than 1 trillion won (US$876million) into constructing assembly lines for organic light-emitting diode display modules in Haiphong, a northeastern port city of Vietnam, according to the firm on March 2.

After initially spending 120 billion won for the establishment of its Vietnamese headquarters, the company broke ground for the construction of the assembly lines in May last year. It also raised 680.7-billion-won funds through state-run agencies and private financial institutes, including Korea Trade Insurance Corporation, an export credit agency, and BNP Paribas.

When the display business arm of LG Group successfully secures its planned 200-billion-won funds this year, the entire investment for LGD’s construction project in Vietnam will total more than 1 trillion won.

“The funds will be used to build the OLED assembly lines and other facilities, such as dormitories for employees,” said an LG Display official, adding the company will try to raise additional funds, if needed, down the road.

The construction is scheduled to be completed in April and the assembly lines will start to churn out OLED display modules from July.

LGD’s Vietnamese assembly lines will be the firm’s first overseas complex dedicated to the OLED. It has shunned building OLED facilities out of Korea in part to prevent a possible leak of core display technologies.

The display firm currently runs two manufacturing plants for OLED displays in the Korean cities of Paju and Gumi.

The decision to build the Vietnamese complex is said to have been made to better respond to increasing demand for OLED displays in the global market.

Major TV and smartphone makers are increasingly adopting OLED displays for electronic products and mobile devices, ditching traditional liquid crystal displays.

Building the facilities in Vietnam, rather than China where the firm has been operating LCD facilities, is also aimed at reducing labor costs and avoiding risks stemming from the Chinese government’s hostile economic policies toward Korean companies due to the recent Korean decision to deploy the US terminal high altitude area defense missile system.

“The Chinese government is highly anticipated to levy hefty taxes on Korean display manufacturers in a bid to nurture homegrown display makers,” an industry official said.

LGD will be able to supply OLED displays readily to its sister firm LG Electronics’ production facilities in the same Vietnamese city and TV production plants in nearby Chinese cities, the LGD official said.

By Kim Young-won (wone0102@heraldcorp.com)

 

[Viet]

A good thing, the more the Chinese put pressure on SKorea the more they will build factories in Vietnam. The other good thing is, the Koreans fear of leak of key technology if building factories in their country but there is no fear when building in Vietnam.

 

[Huan]

A good thing, the more the Chinese put pressure on SKorea the more they will build factories in Vietnam. The other good thing is, the Koreans fear of leak of key technology if building factories in their country but there is no fear when building in Vietnam.

From where will you get your Rare Earth Metals to build tons of those LG products?

 

[jhungary]

From where will you get your Rare Earth Metals to build tons of those LG products?

You do know Vietnam is top 8 Rare Earth Production country in the world, right? They have mined about 300-500MT of rare earth each year.

Just because China dominate Rare Earth Export does not mean other country do not do rare earth extraction, the top 8 are China (100,000 MT), Australia (14000 MT), Russia (3000MT), India (1700MT), Brazil (1100MT), Thailand (800MT), Vietnam (300-500 MT estimated) and Malaysia (~300MT).

 

[Pepsi Cola]

The real motivator here is the rising wage in China. THAAD is a just short term interruption. Chinese governments are way more hostile to Taiwan and Japan, that doesn't stop them from building factories there.

 

[oprih]

Put walls around the factory, you never know when viets will go crazy and try to burn it.

 

[kankan326]

When S.Korean companies totally lose China market, the factory will be shut down.

 

[terranMarine]

The key aspect is losing China as the profitable market not so much fear of leaking technological secrets or avoiding retaliation. The financial damage will be severe once Chinese consumers start boycotting their products no matter if Viets' lower wages compensating the losses (it won't be able to fully cover it anyway), now that's the retaliation that will hurt South Korea.

Chinese tourists can always choose other countries as destination while avoiding South Korea. Less cultural exchanges, SK's business in Mainland taking a steep dive. There are many things Chinese can do to make it tough for South Korean businesses to thrive in Mainland.

 

[enquencher]

Good for vietnam.
U are slowly and steadily going ahead on path of progress.
Viets are very humble and inteligent people would like to visit vietnam soon.
Thaad...its really causing ripples for someone..few days ago saw a post on pdf telling china has something to blind thaad?

 

[TaiShang]

A good thing, the more the Chinese put pressure on SKorea the more they will build factories in Vietnam. The other good thing is, the Koreans fear of leak of key technology if building factories in their country but there is no fear when building in Vietnam.

Do you actually have the capability to copy and make a product similar or better in quality?

Are you sure Vietnamese would not burn them down in times of uncontrolled rage?

Which specific technology that Korean have that China does not have?

 

[hoangsa74]

A good thing, the more the Chinese put pressure on SKorea the more they will build factories in Vietnam. The other good thing is, the Koreans fear of leak of key technology if building factories in their country but there is no fear when building in Vietnam.

basically you are just telling the world Vietnam is stupid and backward

 

[Nilgiri]

You do know Vietnam is top 8 Rare Earth Production country in the world, right? They have mined about 300-500MT of rare earth each year.

Just because China dominate Rare Earth Export does not mean other country do not do rare earth extraction, the top 8 are China (100,000 MT), Australia (14000 MT), Russia (3000MT), India (1700MT), Brazil (1100MT), Thailand (800MT), Vietnam (300-500 MT estimated) and Malaysia (~300MT).

Yup, please refer to how the situation has changed in recent years:

http://oilprice.com/Metals/Commodities/How-China-Threw-Its-Rare-Earths-Monopoly-Away.html

http://io9.gizmodo.com/how-chinas-rare-earth-weapon-went-from-boom-to-bust-1653638596

 

[qwerrty]

Put walls around the factory, you never know when viets will go crazy and try to burn it.

already started at samsung display plant

http://wccftech.com/samsung-vietnam-factory-riot-guards-injure-protest/
5 hours ago

 

[hoangsa74]

i'm very impressed with the Samsung factory in Vietnam, it is very accommodating to the viet workers. however, this factory is an absolute ticking bomb; riots have been going on and off a few times already.

 

[jhungary]

The real motivator here is the raising wage in China. THAAD is a just short term interruption. Chinese governments are way more hostile to Taiwan and Japan, that doesn't stop them from building factories there.

This is actually a given, as the standard of Chinese Manufacturing job increases, the wages and associated cost increase with the standard. And I am not just talking about product standard, but operational, wages and other associated cost.

China have been compensating by developing less desired location for cheaper manufacturer alternative, however, as distant increase and the need to move the factory to a new region increase, at soem point the balance will throw toward establish a new or second line manufacture base somewhere else, I mean, if i have to close my factory in China (we have a steel pipe/girds factory inherited from my mother) I would need to think should I move it westward or should I move it some place else, and at this stage, there are quite a lot of alternative I can choose.

The Chinese government need to start some incentive program to retain the Foreign Investor, otherwise it would not be good for future Chinese economy, when the Area now reaches high living standard.