LGD plant accident and outlook -4
As I implied at the end of last month, LPL shares have continued to run, nearing $17 yesterday and two weeks before that. That's been perfect for working out of my long positions, and I now suspect that the run is almost over with sad news this morning of another death on the 8.5G production line and its closure. That closure is expected to last 2-4 weeks. The last time something like this happened, the duration was towards the shorter end of that range, but a changing Korean government might take a different approach this time around.
Some are seeing political change in Korea as opportunity,
but I think it is too little, too late. China's AMOLED screen
capacity is set to
double each year for the next 3 years, rising to more than
half of Korea's planned production, even with LGD
focusing all of its new capacity on AMOLEDs. The ramp in
China is no longer just rumor and press releases, with plant
construction now in progress. Korea's historical quality
lead is also eroding faster than estimated, with Japanese
providers now beginning to
supply high resolution equipment to Chinese producers.
Behind all this is unrivaled Chinese government backing, and consensus
on the viewpoint that I began
offering over 3 years ago, that AMOLEDs would take over the
display industry. Japan continues to plan its next-gen efforts as
well, though even that now has Chinese
ties. All of this makes me skeptical of press regarding American
production prospects, again with Chinese backing. China is
famous for its horrid working conditions, and LGD's recent news
and history indicate that even if such jobs were to come the U.S.,
they wouldn't be good ones.