LG Display will spend over 10 trillion won, or about $8.7 billion, for building a large factory that will make organic light-emitting diode (OLED) panels.

The Seoul-based company will spend about 1.84 trillion won for constructing the building for the facility called P10 in Paju, South Korea. The factory will build panels for large screens used in TVs as well as small panels used in smartwatches.

The sum of $8.7 billion will be used by LG over a period of three years and the OLED panel factory is expected to start its operations in the first half of 2018.

OLED display panels are an important aspect of any screen as they reduce power consumption, make a devices thinner and display brighter colors. OLED panels are estimated to replace liquid crystal displays, which are currently used in many smartphones such as the iPhone. Experts suggest that Apple may switch to OLED displays for its iPhones by 2018.

"Today's announcement implies that the potential timing of Apple's adoption of OLED screens is set," says Claire Kim, an analyst with Daishin Securities in Seoul.

The investment in an OLED panel factory will intensify LG's competition with Samsung Display, which is a dominant OLED panel maker for smartphones. Samsung Display currently supplies the ultrathin screens of many Chinese handset makers and also for to Samsung Electronics — the rival of Apple in the smartphone space.

The demand for iPhones has been growing very fast in the last few years and it is expected to grow further in the coming years, which means higher demand for display panels.

Experts predict the OLED panel market across the world will climb to $29.1 billion by 2022. Currently, it stands at $13 billion. The share price of the company rose by more than 2 percent following the news that LG will invest over $8.7 billion in the OLED factory in P10.

LG will definitely be one of the biggest suppliers of OLED panels to Apple, but Kim says the upcoming LG factory will not entirely meet Apple's high demand, which means that Apple will have to still take panels from Samsung also.

Photo : Kārlis Dambrāns | Flickr

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