It aims to sell American depositary shares, which will be quoted on the New York Stock Exchange after an international offering, and ordinary shares to be quoted on the Korea stock exchange.
The Seoul, South Korea-based company was formed in 1999 as a 50-50 joint venture between LG Electronics Inc and Philips Electronics NV. It makes TFT-LCD panels for use in notebook computers, desktop monitors and TVs. It also makes panels for mobile phones and PDAs and for applications such as entertainment systems, automobile navigation systems, aircraft instrumentation, and medical diagnostic equipment.
With sales of 20.9 million large-size TFT-LCD panels in 2003, industry researchers DisplaySearch estimated that it had a 22% market share for large-size display panels, defined as 10 inches or larger.
While LG Philips is selling shares on the back of a good set of figures, it will only appeal to investors with strong nerves. Net income rose 189.4% to $878m in the year to December 31 on revenue up 70.9% at $5.31bn.
However, flat revenue in 2001 led it to record a loss of $885.9m, and huge capital expenditures in a cyclical and hugely competitive market leaves the company vulnerable to downturns in the future.
The huge investments needed to keep pace with market growth explain why the company needs a new source of funds. It currently operates five fabs at Gumi, Korea, and two assembly facilities in Korea and China.
It is currently building its first sixth-generation fabrication facility at Gumi and has broken ground on a new TFT-LCD industrial complex at Paju, Korea. This is an expensive business and capital expenditure amounted to $1.25bn in 2003.
But competition is ferocious and LG Philips lists its main rivals as including Samsung Electronics, AU Optronics, Chi Mei Optoelectronics, Chunghwa Picture Tubes, HannStar, Quanta Display, Sharp, and Hitachi.
LG Philips says its current customer base includes Dell Computer Corp, Hewlett-Packard Co, IBM, Apple Computer Inc., Toshiba, NEC-Mitsubishi Electric Visual Systems Corporation, LG Electronics, and Philips Electronics.
While it believes that the most attractive market for TFT-LCD products currently is desktop monitors, it believes this will move to TVs as customers replace conventional cathode ray tube with TFT-LCD products.
