LG Chem sold its OCA·Optically Clear Adhesive business unit to SZZZ of China. LG Chem's move is considered to be an action focused on core business OLED and battery materials.
On September 23, according to the investment bank (IB) industry news, LG Chem sold its OCA membrane division to SZZZ in China for about 60 billion won (about 330 million yuan). OCA is an optically transparent adhesive film used to glue each layer or cover glass of a touch screen panel (TSP) to the display screen. A related person in a chemical company said: "In short, it is an adhesive in the form of a film used to bond panel materials. It is an indispensable material for the manufacture of laptops, tablets, smartphones, and automotive displays."
The sale of LG Chem`s OCA film business unit is part of the selection and concentration strategy to realize the transformation from the display business to the OLED and battery materials company. In 2016, LG Chem acquired the OCA membrane business from LG Hausys at a price of 80.5 billion won, thus entering the business field. At that time, LG Chem explained: “In order to expand its business into industrial fields such as glass windows and strengthen the information and electronic materials business portfolio, it decided to implement the acquisition.” Once, the business`s annual sales reached hundreds of billions of won, which was a core issue. business.
However, due to the cockfighting game among Chinese display manufacturers, LCD profitability has deteriorated significantly. LG Chem has been promoting the sale of LCD polarizers, photosensitive materials and glass substrates since 2019. In February last year, LG Chem signed a sales contract for the LCD color photoresist business with a subsidiary of JSYK Technology. LG Chem sold its production equipment and intellectual property rights in Cheongju, Chungcheongbuk-do for 58 billion won.
While the LCD market is deteriorating and accelerating, in response to market trends, LG Chem established a new cutting-edge materials business division in April 2019 to maximize business synergy and seize the initial market. From the perspective of "future markets and customers," Reorganized and established three business divisions, "IT materials", "automotive materials" and "industrial materials".
It is reported that in the low-price LCD offensive in China, the sales of the OCA film division have also shrunk sharply. In addition, in terms of OLED, TSP is not used, and the On Cell process that puts touch electrodes into the packaging process is gradually increasing, and the demand for OCA is further reduced. A related person in the industry said: “The industry believes that the business unit with annual sales of around 200 billion won has shrunk sharply to billions of won. The overall scale is small. In order to advance the strategy of removing LCD, it is only a matter of time before selling related businesses.”
In July of this year, LG Chem released its company’s long-term plan, choosing environmental protection, battery materials, and new drugs as its future growth drivers. By 2025, it will invest 10 trillion won to grow into the world’s largest integrated battery materials company. LG Chem, which has separated its battery business, is transforming its business portfolio focusing on environmental, responsible, and transparent management (ESG). LG Chem plans to invest KRW 6 trillion out of KRW 10 trillion in battery materials such as cathode materials and separation films, and is committed to growing into the world's number one comprehensive battery material company.
Founder Zhong Group was established in 2003 as a Chinese investment company. With more than 5,000 local employees, it mainly invests in new material development, real estate development, park construction and operation. The acquisition of LG Chem’s OCA Film Division is to strengthen the competitiveness of the materials business.