LG Display has decided to borrow 1 trillion won ($770.1 billion) from LG Electronics to secure operation funds, as the Korean display maker struggles to make ends meet amid sluggish demand.
In a regulatory filing on Monday, LG Display said it decided to borrow 1 trillion won from LG Electronics at an interest rate of 6.06 percent for three years starting from Friday. The display maker would only be obligated to pay the interest during the first two years, and must pay back the loan by the remaining year.
For the purpose of the loan, LG Display said it is to secure operation funds, and to bolster competitiveness of its organic light emitting diodes panel business.
LG Display has been in the red since the second quarter of last year, when it reported a net loss of 382 billion won ($290.8 million), turning from a profit of 424.1 billion won a year earlier.
In 2022, the display maker witnessed its sales decrease by 12.5 percent on-year to record 26 trillion won, and an annual loss of operating profit of just over 2 trillion won.
The poor performance affected its combined cash assets, and LG Display reported its combined cash and cash equivalents as 1.82 trillion won in 2022, down some 1.7 trillion won when compared to the year before.
“With the improved financial solvency, we will continue to increase our share in the premium TV market where we have a strong edge,” LG Display said.
The company said it plans to strengthen product competitiveness with advanced meta technology and secure drive for growth by bolstering its transparent displays and gaming OLED panels. It added it will gain competitiveness in the automotive display market, with its second generation Tandem OLED that kicked off mass production this year.
Reorganizing its business portfolio to focus on OLED panels, LG Display stopped producing the less profitable liquid-crystal display panels for TVs from its Paju factory in Korea last year, and also scaled down production in China.
According to Omdia, a display market tracker, OLED share in the premium TV market -- TVs priced at over $1,500 -- is on a steady rise. OLED TVs took 36.7 percent of the market in 2022, and it is expected to increase to 46.1 percent in 2023, and then take over half, 53.5 percent in 2024.