‘LG Display cuts jobs amid bleak market conditions’

LG Display, the world’s largest LCD maker, is carrying out massive layoffs as part of a restructuring scheme for coping with a bleak business outlook for next year amid a steadily declining LCD market, sources said on Thursday.

About 10 to 20 percent of office and assembly line employees will be subject to the cuts and will receive termination payments for up to 18 months, the sources told The Korea Herald, wishing to remain anonymous.

“It is projected that the company will record a deficit starting from the first quarter of 2014,” said another source close to LG Display. Analysts added that the cuts and the expected quarterly deficit are mainly due to squeezed margins in the saturated LCD TV market, which accounts for almost 40 percent of the firm’s production.

“There is high uncertainty over the market’s growth. LG Display sold a little more than 4 million TVs in the third quarter this year, down 10 percent from 4.5 million-5 million units in the first half. The June-September period is usually the peak season,” said Nam Dae-jong, an analyst at Hana Daetoo Securities.

It is also speculated that the intensified price competition in the smartphone market has led to selling smartphones below production cost.

Smartphones currently account for about 15 percent of the display company’s production.

“The overall price range of smartphones will likely further fall next year due to excessive competition,” Nam added.

Others said the situation at LG Display reflects the overall situation at LG Group, which is desperately trying to make a comeback as a leading electronics maker.

“The reduction is currently happening in other (LG) companies as well, including LG affiliates,” said Brian Park, a researcher at Tongyang Securities.

LG Display’s public relations team denied the layoffs, saying a massive labor cut of this kind could seriously hurt the firm.

By Suk Gee-hyun (monicasuk@heraldcorp.com)