By Joyce Lee and Heekyong Yang
SEOUL (Reuters) -LG Display Co Ltd saw first-quarter profit plummet far below forecasts and warned of a further drop in panel prices as pandemic-driven demand for TVs, smartphones and laptops fades and competition heats up.
The South Korean Apple Inc (NASDAQ:AAPL) supplier said it would shift its focus to higher-end products and gradually lower production of more commoditised LCD TV panels where it lacked a competitive advantage over cheaper Chinese rivals.
The LCD TV market shrank by more than 10% in the first quarter and Chinese competitors are pricing their products lower than LG Display (NYSE:LPL)'s expectations, Lee Tai-jong, head of the company's large display marketing division, said on a call with analysts.
First-quarter operating profit slid 93% to 38 billion won ($30 million), undershooting a Refinitiv SmartEstimate of 182 billion won and marking its lowest quarterly operating profit since the second quarter of 2020.
China's COVID-19 lockdowns also caused supply chain problems that affected panel production and shipments.
LG Display shares extended falls after the earnings were announced to close 3.9% lower, versus the wider market's 1.1% decline.
"Margins have been squeezed chiefly due to panel price declines and weaker demand, as consumers have already bought many screens during COVID-19 in the past two years," said Kim Yang-jae, an analyst at DAOL Investment & Securities.
Chinese rival BOE Technology Group Co Ltd has been tapped to also supply Apple with display screens, said a source with knowledge of the matter.
The source was not authorised to speak to media and declined to be identified. LG Display declined to comment on client matters. BOE and Apple did not respond immediately to requests for comment.
In the first quarter, prices of 55-inch liquid crystal display (LCD) panels for TV sets fell 16% from the previous quarter while prices of LCD panels for notebooks and monitors dropped by around 7% to 11%, according to data from TrendForce's WitsView.
($1 = 1,263.0100 won)