SHARE THIS ARTICLE Share Tweet Post Email

Apple Inc. supplier LG Display Co. will spend more than 10 trillion won ($8.7 billion) on building a new plant and expanding production of a newer type of display that can be used to cut power use, make thinner devices and show brighter colors. Shares rose.

The factory will produce organic light-emitting diode displays for larger TVs, smartwatches and automotive displays and is targeted to start in the first half of 2018, Seoul-based LG Display said Friday. The technology has been touted as a possible replacement for the liquid-crystal displays used in smartphones. Apple plans to adopt OLED for iPhones from 2018, the Nikkei newspaper reported Thursday without attribution.

“Today’s announcement implies that the potential timing of Apple’s adoption of OLED screens is set,” said Claire Kim, an analyst at Daishin Securities Co. in Seoul.

LG Display said in August it planned to spend about 10 trillion won over three years to develop the advanced screens, which offer a brighter, sharper picture than LCDs. The panels also save space and power because they do not need a backlight. Slowing sales of LCDs is hastening a push into OLEDs for smartphones and wearable devices.

The investment intensifies the company’s rivalry with Samsung Display Co., the dominant maker of OLED panels for smartphones. Samsung supplies the ultra-thin screens to Apple’s key competitor Samsung Electronics Co. and to Chinese phone makers. Apple’s demand for the panels will be strong enough to support more than one big maker, Kim said.

Apple Demand

“I don’t think the P10 plant alone will entirely cover Apple devices only, so Apple has to turn to Samsung to secure stable production,” she said.

LG Display shares rose 2.2 percent in Seoul to 25,700 won, narrowing the decline this year to 24 percent. The benchmark Kospi index has risen 5.9 percent.

Apple is LG Display’s biggest customer, accounting for about 25 percent of sales, according to Bloomberg supply chain analysis. The South Korean company last month reported a 30 percent decline in third-quarter operating profit as prices and demand fell.

A group of 200 employees at Samsung Display, which already provides OLED screens for the Apple Watch, created a standalone team working exclusively on screens for Apple products, people with direct knowledge of the matter said in April.

The two South Korean makers are the biggest producers of OLED screens, while Universal Display Corp. controls patents on some of the most advanced materials used in the displays.

The global OLED market is forecast to climb to $29.1 billion by 2022, from $13 billion this year, the company said, citing estimates by researcher IHS.

( Updates with shares rising beginning in first paragraph. )