LG Display (034220.KS) said its third-quarter operating profit fell sharply from a year earlier, hurt by a stronger won against the dollar and by "chipflation," the broader rise in costs driven by surging memory chip prices. The company said it will improve profitability by expanding sales of organic light-emitting diode (OLED) panels for Apple MacBooks and premium televisions and by adopting next-generation process technology.
Operating profit came to 250.6 billion won ($176 million) on a consolidated basis in the third quarter, down 42% from the same period last year, the company said on the 22nd. The company returned to profit after a loss in the previous quarter, helped by a strong early reception for the iPhone 18 Pro from Apple, its largest customer, but results trailed those of the third quarter of last year.
The company pointed to the stronger won and chipflation as the main reasons for the decline. LG Display draws a large share of revenue in dollars because Apple and other overseas companies are its main customers. When the won-dollar exchange rate falls — that is, when the won strengthens against the dollar — dollar-denominated revenue converts into fewer won. Soaring memory chip prices have also raised costs for smartphone makers, increasing pressure to lower OLED panel prices. Concerns that higher chip prices will dampen smartphone demand also weighed on earnings.
Third-quarter revenue was 6.277 trillion won ($4.4 billion), up 12% from the previous quarter but down 10% from a year earlier. Along with currency and chipflation effects, the decline reflected lower shipments of less profitable liquid crystal display (LCD) products as the company reshapes its business mix.
LG Display plans to push further into the premium market to lift both revenue and profitability. In small and mid-size OLED, it aims to hold its share of the mobile market, including the iPhone, while capturing demand for OLED in information technology devices as adoption widens to products such as the MacBook and iPad. In large OLED, it will expand its television and gaming monitor lineups.
The company also recently developed a next-generation OLED process technology called Flip, which it says can raise productivity by 24%, and will begin applying it to OLED production lines for IT devices.
Kim Sung-hyun, chief financial officer of LG Display, said the company focused on strengthening competitiveness and improving operational efficiency in the third quarter amid continued uncertainty in the external business environment, including currency and component price swings. "We will continue to pursue differentiated technological competitiveness and cost innovation to improve our ability to respond to changes in the external environment and further strengthen a stable foundation for generating profit," the CFO said.