A “deadly accident” at LG Display’s (LGD) P8-1 panel fab in Paju, South Korea on June 24 will cause a significant disruption to its production of large LCD panels in the third quarter of 2017, according to WitsView, a division of TrendForce.
WitsView reports that “Gen-8.5 has been shut down for repair and investigation by the local authorities.” No further information is available about the type of accident or injuries.
It’s also not known if the accident occurred in the same building as the nitrogen leak two years ago at an LGD factory in Paju.
“The current information that we have is that this incident occurred at the same manufacturing cluster where the nitrogen leak happened in 2015,” Boyce Fan, WitsView’s research director, told EPSNews. "However, the company and local authorities at that time did not reveal to the public if this latest accident took place in the same factory building. P8-1 is a Gen-8.5 process line that has mainly been producing LCD panels for TVs and monitors. We are not sure if this line is housed together with the Gen-8 line that had the nitrogen leak.”
The accident together with an uptick in seasonal demand from device vendors in the third quarter is expected to result in tight supply and price stabilization of large panels until the LGD fab is back in operation. The repair is expected to take between two to four weeks.
WitsView analysts estimate that LGD’s monthly production capacity for large panels will be reduced by 715,000 square meters. As a result, analysts revised the “glut ratio of the large-size panel market” in Q3 to four percent. This will further decrease to 3.4 percent if the fab is closed for two weeks, and down to 2.8 percent if closed for four weeks.
“On the whole, the supply in the third quarter will be tighter than initially anticipated. Furthermore, prices of panels of certain sizes (e.g. the 55-inch) will regain stability after experiencing a gradual slide in the second quarter,” according to WitsView.
This means device vendors will struggle making adjustments to their panel purchases and product mixes. “LGD’s compatriot and Japanese clients will bear the brunt of the supply disruption, while some orders will be shifted to Samsung Display (SDC) and BOE Technology (BOE),” said WitsView. “As for Taiwanese panel makers, their ability to take advantage of this situation is also limited because their product mixes are very different from LGD’s.”
Overall, WitsView expects the lower production capacity to cause orders to be rerouted to other suppliers and increase stock-up activities during the traditional busy season in the third quarter.
EPSNews will provide updates as additional information becomes available.