Philips buys stake in LG's LCD armg

Philips buys stake in LG’s LCD armg
Richard Ball Philips Electronics is buying a 50 per cent stake in LG LCD, the liquid crystal display division of South Korea’s LG Electronics. The investment in the active matrix LCD producer is valued at $1.6bn. LG LCD will corner nearly 20 per cent of the world market for AMLCDs, the firms claim. It is aiming for revenues of $1.8bn out of a total market of over $9bn. The joint venture is typical of LG’s recent business deals as it tries to survive the Asian crisis. It has a policy of ‘select and focus’, in other words sell or close parts of the firm not core to its business. This has made the firm $4bn since it began the process last year. Philips will use profits from the joint venture to offset losses in its own AMLCD production. Just last month, the Dutch firm announced it was closing a first generation AMLCD production facility in the Netherlands. Production was transferred to its joint venture with Hosiden in Japan. This joint venture, of which Philips owns 80 per cent, lost over $100m last year. Initially, the LG LCD link-up will begin as a manufacturing and technology joint venture “with the potential to develop into a full joint venture over time”, Philips said. It could then combine its Hosiden and LG LCD operations to reduce overheads. LG LCD runs three factories in Korea, two of which will be expanded as part of the deal. The third will start manufacturing glass up to 680 x 880mm in size.

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