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Phillips withdraws from LCD JV

Gerard Kleisterlee, chairman and CEO of Philips, has said that the Dutch electronics giant will sell all of its shares in the LG-Philips liquid crystal display (LCD) venture with South Korea“s LG Ele…

Gerard Kleisterlee, chairman and CEO of Philips, has said that the Dutch electronics giant will sell all of its shares in the LG-Philips liquid crystal display (LCD) venture with South Korea“s LG Electronics. On 26 November 2006 Mr. Kleisterlee said, “As the price of LCD panels is too volatile, its profits are unreliable. We plan to sell the stock according to market principles. We will choose the best way to maximize shareholder profits”. He strongly denied recent speculation in South Korea that Philips will strike an LCD deal with Toshiba, a Japanese company. He declined to talk about a timetable for selling shares. Phillips“ decision to minimize the shock to the market is out of respect for its investment partner, LG Electronics. Kang Yoon-heum, an analyst at Daewoo Securities, said, “Philips has not been able to find a company who can buy all the stocks, worth KRW 3.4 trillion, at once.” Stock experts expect that Philips is likely to start selling in July 2007 when 30% stock holding limits will expire according to contract terms with LG. Mr. Kleisterlee said, “We will diversify the suppliers of display panels that are used to make big-screen TVs. Taiwanese and Japanese companies will become our other suppliers.” Under contract terms with LG, 25% of LG.Philips“ LCD output goes to Philips. When Philips multiplies its supply channels, it is likely to hit the joint LCD business hard as sales connected with Philips decline. LG.Philips LCD and Nippon Electric Glass are joint venture partners in a back-end glass polisher and processor, Paju Electric Glass Co., Ltd., which is located in the Paju Display Cluster in Gyeonggi Province, South Korea. Construction of the plant, which has a monthly capacity of 60,000 glass sheets, was completed in June 2006.

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