LG Display is Facing a Dilemma of Losses, Announcing Large-Scale Layoffs

On September 3rd, according to the latest reports in the Korean media, the world’s leading panel maker LG Display (LGD), in order to cope with the current challenges of the industry, reduce labor costs and optimize the allocation of resources, recently launched a “voluntary separation program” in the production sector. The goal of the program is to achieve flexible adjustment of the company structure and effective cost control by encouraging employees to leave voluntarily. According to the latest statistics, more than 1,400 employees have responded positively by submitting voluntary separation applications.

According to the plan, employees who apply for voluntary resignation will enjoy a generous economic compensation plan, which fully shows the long -term recognition of LGD to employees. Specifically, each employee who chooses to resign will have the right to get an economic compensation, which is equivalent to the total amount of a fixed salary of up to 36 months. This measure aims to minimize the economic pressure that employees may face to the greatest extent and promote the smooth progress of the plan.

According to the report, as of the end of June this year, LGD has received voluntary retirement applications from production workers over 28 years old and over three years old. Among them, 410 people applied for a voluntary retirement of the Turtle Factory, and 990 people applied for the Pozhou plant. These voluntary retirees account for about 5.12% of the company’s total employees. Considering that production workers account for 65% of the total number of employees, this ratio is particularly significant in the production department.

LG Display’s move is closely linked to its financial difficulties in recent years. LGD, as a panel manufacturing giant established in 1985, has been one of the world’s leading LCD panel manufacturers since its listing in the United States in 2004. Its annual revenue has remained at about 2830.05 billion won. In order to improve the cost structure and performance status, LGD has sold some panel business in China.

However, in recent years, due to the serious impact of market supply and demand, LGD has continued to lose money since the second quarter of 2022. Until the fourth quarter of 2023, the cumulative loss of more than 56.598 billion won during the period. In 2024, although the comprehensive sales reached 6.71 trillion won, an increase of 42% year-on-year, the business loss was still as high as 93.7 billion won. Although the operating loss has been significantly reduced compared with the 88.15 billion won in the same period last year. In the second quarter, the company recorded a net loss of 470.8 billion won, but the EBITDA profit before the interest and taxation reached 1.29 trillion won.

From a financial perspective, LGD is facing multiple challenges: operating cash flow has plummeted by nearly half, investment spending has increased dramatically, the company has to rely on fundraising activities to maintain operations, the debt burden has become increasingly heavy, and the gearing ratio has hit a record high. In addition, current liabilities have become higher than current assets, and financial risks have risen significantly.

To cope with this dilemma, at the end of August this year, LG Display announced that it closed the M3 (module) production line located in Guifei, South Korea. The production line focused on the manufacturing of IT LCD module products. The move directly led to about 700 turtle-tail workers facing the re-distribution of the post, and some of them had chosen to accept voluntary retirement plans. At the same time, the company has also accelerated the pace of transformation towards OLED business, hoping to further reduce losses through the optimization of product structure and open up a new path for the company’s future development.

In addition, in the past two years, the number of non-formal employees of LGD has experienced significant increase or decrease fluctuations. Specifically, the number of non-formal employees in 2021 was 2,285, and in 2022, it increased to 3,025, with a growth rate of more than 30%. Faced with the dilemma, the company adopted measures to reduce the number of production workers and plans to transfer some production activities to Vietnam, in order to further reduce the cost of labor.

LG Display’s loss dilemma and its subsequent large-scale layoffs are the necessary and urgent measures to respond to industry changes and market challenges. Through the strategic transformation and business restructuring initiatives of layoffs to reduce costs, phasing out the LCD business, and focusing on the OLED market, LG Display aims to optimize and upgrade its business structure in the future so as to take a more solid and favorable position in the global display technology industry. However, this transformation process is undoubtedly full of challenges. It requires the company’s management to join hands with all employees to work together to overcome difficulties.