LPL LG Display Co., Ltd.

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LG Display Co., Ltd. Q3 F2026 Earnings Call Transcript

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Moderator
Investor Relations Moderator
Good morning and good evening.
Conference Operator
Conference Call Operator
Thank you all for joining the conference call for the LG Display Earnings Results. This conference will start with a presentation followed by a Q&A session. If you have a question, please press star and 1 on your phone during the Q&A. Now we will begin the presentation on LG Display's third quarter of fiscal year 2026 earnings results.
Kim Kyu-Dong
Chief Executive Officer, LG Display
Hello, I'm Kim Kyu-Dong, CEO of LG Display. I would like to thank everyone who attended the 3rd quarter of the year. Today's conference call was attended by CEO Kim Sung-Hyun, CEO Jo Seung-Hyun, CEO Kim Jong-Deok, CEO Ahn Yoo-Shin, CEO Baek Seung-Yong, CEO Son Ki-Hwan, and CEO Lee Ki-Young.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Good afternoon. This is Kim Kyu-Dong, Vice President in Charge of Finance and Risk Management at LG Display. Thank you for joining our third quarter 2026 earnings conference call. Joining us today are CFO Kim Sung-Hyun, Vice President Cho Sung-Hyun in Charge of Business Control and Management, Vice President Kim Jong-Duk in Charge of Large Display Planning and Management, Ahn Yoo-Shin in Charge of Medium Display Planning and Management, Vice President Baek Seung-yong, in charge of small display planning and management Vice President Son Ki-hwan, head of auto marketing and product planning, and Lee Ki-young, in charge of business intelligence.
Kim Kyu-Dong
Chief Executive Officer, LG Display
The conference call will be held in the form of a Q&A. Please refer to the details of the results in the investment information section on the website.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
This conference call will be conducted in both Korean and English. For more details on the company's performance, please refer to our disclosure or the investor relations section in the company's website.
Kim Kyu-Dong
Chief Executive Officer, LG Display
Please refer to the disclaimer before we begin the presentation. The content of today's presentation is The financial figures presented in today's earnings release are consolidated figures prepared in accordance with international financial reporting standards. These figures have not yet been audited by an external auditor.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
and are provided for the convenience of our investors.
Kim Kyu-Dong
Chief Executive Officer, LG Display
I will now report on the company's business performance in Q3 2026. Revenue in Q3 was 6.277 trillion won. In this somewhat unfavorable environment, especially with a strong Korean won,
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
The company was able to grow shipment thanks to the start of seasonality for major OLED products like large size and mobile. Revenue grew 12% QOQ, fell 10% YOI, mostly due to the shipment decrease of mid-sized LCD products as a result of our portfolio realignment centered on profitability.
Kim Kyu-Dong
Chief Executive Officer, LG Display
As mentioned in the previous sales, sales have expanded to large-sized and mobile OLED products, but the average exchange rate of $1 per month has dropped by about 6% compared to the previous year, and it was quite difficult to manage the Korean market due to the inflation. In addition, as the price of the set increases, the demand for high-end products by the company, which the company focuses on, decreases by 42% compared to the previous year, and the improvement is limited compared to the previous year.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Operating profit was 250.6 billion won, slightly improving QOQ and falling 42% YOI. As I just explained, shipment of large size and mobile OLED products grew, but the one-to-dollar exchange rate fell by 6%, and the chiplation constrained our effort to manage ASP. Prices also rose for some sets, Operating profit margin was 4% and EBITDA 19%. Net income stood at 755.6 billion won thanks to the vast improvement in SX translation gain following the won's appreciation near the quarter end.
Kim Kyu-Dong
Chief Executive Officer, LG Display
Next is area shipment and ASP trends. The drop in large-sized OLED products has increased by about 4% compared to the previous quarter. The drop in large-sized OLED products has increased by about 4% compared to the previous quarter.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
The drop in large-sized OLED products has increased
Kim Kyu-Dong
Chief Executive Officer, LG Display
As the mobile OLED product shortage increased, it recorded $1,250, which increased by 16% compared to the previous quarter.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Price per square meter rose 16% QOQ to $1,250 thanks to growth in shipment of mobile OLED products despite the unfavorable external environment including the chip inflation. Next, I will discuss the revenue breakdown by product category.
Kim Kyu-Dong
Chief Executive Officer, LG Display
The IT sector, which decreased by about 7% compared to the previous year, decreased by about 29%,
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
With the start of seasonality, shipment of mobile products grew, increasing its share out of revenue to 42%, up by 10 percentage points QOQ, which was also the biggest change among all product categories. In contrast, shipment of IT fell, with its share declining to 29%, Down by 7 percentage points. TV and auto share remain largely unchanged.
Kim Kyu-Dong
Chief Executive Officer, LG Display
In the midst of the uncertainty and variability of the foreign environment, the company continues to strengthen its business structure based on differentiated OLED products, and as a result, the OLED share in total sales is gradually increasing. The 3-minute OLED sales share is 10% compared to the previous quarter,
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Even as external uncertainties and volatility continue, the company is carrying on our work to upgrade our business structure centered around OLED, which is gradually increasing OLED's share out of total revenue. As of Q3, OLED's shares stood at the highest quarterly level of 67%, up 10 percentage points QOQ and 2 percentage points YOI.
Kim Kyu-Dong
Chief Executive Officer, LG Display
As of Q3, OLED's shares stood at the highest quarterly level of 67%, up 10 percentage points QOQ and 2 percentage points YOI. As of Q3, OLED's shares stood at the highest quarterly level of 67%, up 10 percentage points QOQ and 2 percentage points YOI.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Next is financial position and key metrics. Cash and cash equivalents in Q3 was 1.5097 trillion won, slightly up QOQ. The debt-to-equity ratio stood at 254%, and the net debt-to-equity ratio at 141%, both improved from the previous quarter.
Kim Kyu-Dong
Chief Executive Officer, LG Display
Next is guidance for Q4. Area shipment is expected to grow around 10% in Q4.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Continuing from the previous quarter, seasonality will keep driving shipment, but there is still some impact from the advance purchase that was made in the first half, as well as uncertainties in set demand due to the chipflation, which merits continued close monitoring over the market.
Kim Kyu-Dong
Chief Executive Officer, LG Display
In the case of annual price evaluation, consumer demand is reduced, chipflation and price increase of raw materials are caused by the uncertainty of the foreign environment, As for the ASP, with softer consumer demand and external uncertainties such as deflation and rising prices of raw materials, any increment is not likely to be significant. Price per square meter in Q4 is expected to rise by low single percentage
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
I will now turn the call over to our CFO, Kim Sung-Hyun.
Kim Kyu-Dong
Chief Executive Officer, LG Display
Good morning and afternoon. This is the CFO, Kim Sung-Hyun. Thank you for joining us at this conference call.
Kim Sung-Hyun
Chief Financial Officer, LG Display
I would like to talk about the key points of the 3rd quarter's performance. In the 3rd quarter, the uncertainty of the business environment continued, including the exchange rate and price fluctuations, the demand for high-end products and IT products, but even in the midst of that, the company was able to achieve improved results compared to the previous quarter by focusing on OLED-centered business competitiveness and operational efficiency.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Allow me to briefly walk you through our Q3 highlights. Even while external uncertainties continued, such as the exchange rate, component price fluctuations, and slowing demand for IT products, including high-end, the company was able to improve our performance over the previous quarter thanks to improved business competitiveness based on OLED and higher operational efficiency.
Kim Sung-Hyun
Chief Financial Officer, LG Display
Chifflation is affecting the entire industry, and the set price is rising. In particular, in a situation where the demand for high-end products, which the party has a strong advantage over, is divided, the profit-making strategy that the party judges continues to carry out price innovation that can lose influence due to chifflation, while constantly presenting and escalating the technology of discrimination above competition.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
The chipflation is driving up the price of sets across the industry, and demand is particularly slowing for high-end products, which are the company's strengths. In this environment, what we see as a way to ensure profitability is to keep innovating costs to offset the chipflation and ceaselessly develop and upgrade technologies that set us apart and that can help us maintain our competitive edge.
Kim Sung-Hyun
Chief Financial Officer, LG Display
As part of this strategy, we keep upgrading the productivity and efficiency of our existing infrastructure while developing leading-edge technologies that will keep our distance from the pack
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
and become our future growth engines.
Kim Sung-Hyun
Chief Financial Officer, LG Display
As reported by the media recently, Dangsan is continuing its technological advancements, such as succeeding in the development of the next-generation OLED patterning technology, Flip. Flip technology is considered to be the next-generation technology that can expand the potential and leadership of OLED with the results of the experience of OLED technology and the experience of Yangsan. Dangsan is expected to be the next-generation technology
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
As was reported by the media recently, the company remains focused on technological innovation, evidenced by the successful development of the next-generation OLED patterning technology, or FLIP. FLIP is the culmination of the evolution of our OLED technology and mass production experience. We see it as the next-gen technology that will broaden OLED's applicability and technological leadership. The company remains committed to heightening our technological competitiveness based on our proprietary technology and accumulated know-how to translate them into real business performance. We will keep working to equip ourselves with differentiated technological competitiveness and innovate the cost structure to enhance our readiness against external changes and ensure stable profit generation.
Kim Sung-Hyun
Chief Financial Officer, LG Display
Let me now briefly outline our strategy for each business area. The large-scale business is leading the premium market based on its unique OLED technology and product competitiveness. In the future, TV OLEDs will increase the competitiveness of premium products and expand during the product with price competitiveness to respond to the various demands of customers. On the other hand, monitor-type OLEDs will strengthen the gaming OLED product lineup that applies its unique technology,
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
In large panel, the company continues to lead the premium market based on our proprietary OLED technology and product competitiveness. We will keep strengthening our premium TV OLED products while broadening the lineup of price competitiveness products to accommodate diverse customers' needs. Meanwhile, in monitor OLED, we will boost our gaming OLED product lineup with our unique technology and widen our presence in the market.
Kim Sung-Hyun
Chief Financial Officer, LG Display
In small and medium displays, we plan to keep up our competitiveness in high-end products leveraging our differentiated technological leadership
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
and reliable development and production capability.
Kim Sung-Hyun
Chief Financial Officer, LG Display
In mobile, we will solidify our market position with our tech competitiveness
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
and Reliable Supply Execution. And in IT, we will focus on high-value-add products while improving cost competitiveness to achieve higher profitability.
Kim Sung-Hyun
Chief Financial Officer, LG Display
The auto industry is facing a difficult environment, such as the growth rate of the entire automobile market, the slow speed of electric vehicles, and the competition between panel companies, but while promoting a profit-oriented strategy centered on price improvement,
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
In auto, the environment is challenging, with broadly slowing growth in the auto market, moderating transition to EV, and tougher competition among panel suppliers. But we will further elevate our business competitiveness by solidifying our position in the premium market with the strategy of improving profitability based on cost innovation.
Kim Sung-Hyun
Chief Financial Officer, LG Display
Last is on the company's investment strategy.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
The company maintains the strategy of cautiously investing in future technology based on visibility into market demand and close consultation with customers. At the same time, we are also methodically building up our plans for future growth of Future Growth Engines and Mass Production Competitiveness by developing new technologies like FLIP that maximizes the strength of OLED.
Kim Sung-Hyun
Chief Financial Officer, LG Display
We will keep improving our financial structure
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
While upgrading our leading technology, it can help innovate customer value and the display industry. Meanwhile, we will make investment decisions at the right time, upon careful review of the market and investment environment, to lose no time in responding to customers' and consumers' needs, and speedily expand our business performance. CapEx spend this year is expected at around low 2 trillion won. Investment in new OLED technology that we already communicated with the market will move ahead as planned with mass production to begin at the right time. Thank you very much. This concludes our presentation of business highlights for Q3 2026. We will now take your questions. Operator, please commence the Q&A session.
Conference Operator
Conference Call Operator
Now, Q&A session will begin. Please press star 1, that is star and 1, if you have any questions. Questions will be taken according to the order you have pressed the number star 1. For cancellation, please press star 2, that is star and 2 on your phone. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per each participant. The first question will be provided by Min Kyu Kwon from Kiwoom Securities. Please go ahead with your question.
Min Kyu Kwon
Analyst, Kiwoom Securities
Hello, I'm Min Kyu Kwon from Kiwoom Securities. Thank you for your question. I'd like to ask two questions about new technologies. First of all, there have been a lot of media reports on the click technology of LG Display, and the company seems to be appealing a lot of technical aspects. I'm curious about the technical advantages and response strategies for competitors. And the second question is, Thank you very much for taking my questions. I have a couple of them with regards to the company's new technology. There have been quite a lot of media reports about LG Display's flip technology.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
which the company also seems to be emphasizing in terms of the technological advantages. So my question is with regards to the overview of the FLIP technology. What would be the investment timing and scale as well as the mass production schedule utilizing FLIP as well as the product applicability and potential customers? And also given the fact that some of the peers have already gone into mass production based on the 8.6-gen technology, then what would be Flip's advantages over the 8.6-gen technology? And also, what would be the company's competition strategy to counter the 8.6-gen? And also, if Flip Investment were to move fully ahead, then what changes can we expect in terms of the company's medium-term business strategy, and in particular, What direction does the company plan to take with the IT LCD? This is Ahn Yoo Shin in charge of medium display planning and management. Now, first about the new technology, FLIP. FLIP is an RGB OLED patterning method that allows us to use the full-sheet Gen 8 mother glass without having to use SMM. It is the next-gen OLED technology, which is the culmination of the evolution in our OLED technology and know-how so far. And it also has far stronger advantages over existing approach in terms of product specifications, production process, and cost.
Ahn Yoo-Shin
Vice President, Medium Display Planning and Management, LG Display
In terms of product specifications and performance, it has advantages such as improved product quality, improved speed, improved life, and improved consumption strategy. In terms of product specifications and performance, first, it improves the aperture ratio, which improves brightness, lifespan, and power consumption.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
It allows individual patterning of RGB, optimizing pixels for each device, maximizing OLED device efficiency, and improving color representation and viewing angle. And in terms of production, it does not require repeated iteration of alignment and attachment between the mother glass and the FMM. And since it does not use FMM, it goes through the process continuously for each step, which reduces the process time and improves efficiency.
Ahn Yoo-Shin
Vice President, Medium Display Planning and Management, LG Display
In terms of cost, it uses the 8th generation original
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
In terms of cost, we can use the full-sheet Gen 8 mother glass, which gives us higher cutting efficiency and productivity. With higher deposition efficiency as well, it offers better material cost. In terms of our plans for investment and production of Flip, for example, the size or the timing of such investment and production have not been finalized yet. We are preparing for our future OLED business with Flip. Next, I'd like to talk about the ITLCD business.
Ahn Yoo-Shin
Vice President, Medium Display Planning and Management, LG Display
The ITLCD business is a very important business in terms of demand growth and competition. It is a business that focuses on high-end products of major strategic customers and plans to increase product portfolios continuously. And a few words about the latter part of your question, which was on the IT LCD. Now, IT LCD business is an area where cost is crucial due to slowing demand and growing competition.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Next question please. Thank you. We'll take the next question.
Conference Operator
Conference Call Operator
The following question will be presented by Kango Park from Daishin Securities. Please go ahead with your question.
Park Kang-Ho
Analyst, Daishin Securities
Yes, hello. I'm Park Kang-ho from Daishin Securities. Thank you for the opportunity to ask me a question. I'd like to ask you a question. I would like to ask two questions. The first question is, based on the recent OLED monitor, it seems that large OLED panels are expanding rapidly. I am curious about the company's outlook on OLED appearance and profitability this year and next year. I would like to ask for some comments. The second question is, as of now, there is a high demand for OLED panels
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Thank you for taking my questions. I also have a couple of questions with regards to the company's important business, which is OLED. Now my first question is, the shipment of large OLED panels seems to be growing fast, led by OLED monitors. And I would like to ask for the company's comments on the company's projection for your shipment for this year and next, as well as profitability. And the second question is, what is the company's mid- to long-term business and fab operation strategy for large OLED, including the timing of reutilization of part of the capacity in Paju?
Kim Jong-Duk
Analyst, Daeyoung Project Management
I'm Kim Jong-Deck from Daeyoung Project Management. I have two questions for you. The first question is, we are expecting a 20% increase in the number of fans for the Daeyoung OLED project this year, which is the second half of 7 million. Among them, we are expecting about 20% increase in the number of OLED monitors. Based on the expansion of the number of OLED monitors next year, We are aiming to achieve a meaningful growth rate this year. In terms of profitability, recently, the entire TV market has been growing, and it is expected that the price will continue to rise, such as inflation and logistics, so there will be some changes, but in this regard, our business department will expand the output of the panel a little more and continue to reduce the price.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
This is Vice President Kim Jong-Duk in charge of large display planning and management responding to the questions. Now, first about the large OLED business. Yes, the panel shipment for large OLED this year is projected at the high 7 million range, higher by around 20% YOY. Of them, OLED monitor will be about 20%. We plan to maintain meaningful growth into next year as well based on the increase in shipment for OLED monitors. And as for profitability, there will be some volatility with downturn in the TV downstream market, chipflation, and rising cost in logistics, among others. But we will try to secure a stable revenue structure by increasing panel shipment and continuing our cost-cutting initiative.
Kim Jong-Duk
Analyst, Daeyoung Project Management
In relation to the second question, the demand for the large OLED panel has increased gradually, and the operating rate of the current Kepa is continuously increasing. In the future, we will gradually increase the demand for the TV monitor, the demand intensity of the front market, and our internal optimal production ratio, and compare it with the increase in demand. Lee, Chul-Dong Jeong, Sung-Hyun Kim, Yong Min Ha, Soo Young Yoon, Chul-Dong Jeong, Myoung-Kyu Kim
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
And about your second question, our utilization of existing capacity continues to go up following the growth in demand for large OLED panel. We will restart part of the capacity flexibly in proportion to the increment demand while considering the demand intensity in the TV and monitor downstream market and the optimum production ratio. For large business, we plan to go beyond the TV market where we are currently strong. We will broaden our monitor market with the W-OLED technology and keep growing our business by maximizing our use of existing infrastructure and resources. We will secure stable volume based on win-win partnership with our customers and further elevate our leadership in large OLED by improving cost and tech competitiveness.
Kim Kyu-Dong
Chief Executive Officer, LG Display
I'll take the next question.
Moderator
Investor Relations Moderator
The next question is from Yoon Jong Hyun of UBS.
Conference Operator
Conference Call Operator
The following question will be presented by Jeong Hyun Yoon from UBS. Please go ahead with your question.
Jeong Hyun Yoon
Analyst, UBS
Thank you for the opportunity to ask a question. I have two questions about the mobile OLED and the IT OLED panel business. After the release of the foldable smartphone in North American customers, the market and consumers' expectations have been high. However, in the case of the existing bar type, where the form factor has not changed much, the initial reaction of the market seems to have been relatively weakened. I would appreciate it if you could share with us the appearance of the mobile OLED panel and the direction of actual sales. Thank you for taking my questions. I have two questions on the mobile OLED and IT OLED. Now, the first question is about the mobile.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Customer's unveiling of the foldable smartphone has escalated expectations in the market and consumers. But for the bar-type phone, where the form factor hasn't changed, initial market reaction appears to be subdued. What is the trend in the panel shipment and actual sales that the company is currently seeing? And the second question is, Now, the launch of the foldable also triggered concerns for potential erosion of demand for tablet products. Does the company see foldable smartphones affecting demand for tablets as well?
Baek Seung-Yong
Vice President, Small Display Planning and Management, LG Display
I'm Baek Soon-yong, CEO of Foldable Smartphones. Foldable smartphones provide a new form factor that differentiates consumers from other consumers, and the increase in demand for foldable smartphones is expected to increase in the future due to AI optimization. This is Vice President Baek Seung-yong in charge of small display planning and management. And yes, the foldable is expected to see growing demand because it provides differentiated value to consumers with a new form factor and addresses the need for
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
The market is expected to grow to some extent.
Baek Seung-Yong
Vice President, Small Display Planning and Management, LG Display
Bata's smartphone is also expected to continue to maintain its mainstream in the premium field while preparing for new technology applications. This is why the company is seeing that it will be able to achieve the planned dropout rate without delay. We will continue to prepare for the next generation of technology in line with the trend required by the market and customers, and we plan to maintain more public leadership and leadership in the market.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Again, it seems as if the foldable market is set to grow. But also at the same time, the bar type is likely to remain the mainstream product as it continues to innovate itself with new technologies. So for the company, we will be making the investment according to our plan. And we will also keep up with the trends and the demands from the market as well as the consumers, and also keep in line with the next generation evolution. So that we can maintain our leadership in the market. And now with the launch of the foldable products, yes, perhaps there may be some concerns about its impact on the demand for the tablet at the same time. But then we do believe that the demand for these different types of products is different. Also, the target customers are different. So the projection is that given the fact that the target customers and the purpose of each product segment are different, The impact is going to be limited. We will take the next question.
Conference Operator
Conference Call Operator
The following question will be presented by Jeong Hun Jang from Samsung Securities. Please go ahead with your question.
Jang Jung-Hoon
Analyst, Samsung Securities
Hello, this is Jang Jung-hoon from Samsung. Thank you for the opportunity to ask a question. I will also ask two questions. First of all, I know that the pressure on the customer's market is high due to the recent situation. According to this, I would like to ask you to explain to us how much our profitability is affected. Thank you. I also have two questions.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
The first is that it's been said that the chipflation has intensified customers' pressure on the panel price. So the question is then how much, if any, has it been affecting the company's profitability? And the second question is, despite the fact that the share of the revenue by the mobile products has gone up at the same time, the mobile business appears to have more downside risks than upside risks. Due to stronger competition despite the concentration in the strategic customers, so my question is then what is the company's business strategy or the response strategy against this?
Baek Seung-Yong
Vice President, Small Display Planning and Management, LG Display
Yes, I'm Baek Seung-yong from Soyoung Project Management. The increase in the share price of the entire industry and the macro-environment change are a practical factor that the entire industry has witnessed, and the parties are also fully aware of the effects of profitability. In the medium term, we are promoting the expansion of the supply chain, This is Baek Seung-ryong again for the insurance of the small display planning and management.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Now, in terms of the pressure in the downstream industry, as well as the volatility, this is something that is occurring generally across the market. And yes, it is also affecting the company as well. Our goal is for the medium to longer term to continue to increase volume, but also at the same time, given these various constraints, it is also likely that our profitability improvement is going to be limited compared to the increase in the volume.
Baek Seung-Yong
Vice President, Small Display Planning and Management, LG Display
The company continues to strengthen its position within the customer value chain based on long-term collection technology competitiveness in the smartphone panel area and product reliability, Based on the technology that we have continued to build up in the smartphone panel business, we will continue to strengthen our position in the market as well as the technological leadership
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Also, based on our cost innovation and also upgrade in the product and operation, we will continue to maintain stable performance while at the same time driving growth in both the revenue and volume so that we can continue to achieve sustainable performance.
Baek Seung-Yong
Vice President, Small Display Planning and Management, LG Display
To respond to medium-term market demand, Now in order to
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Respond to the changes in the market and the market demand, we will continue to maximize the use of existing production infrastructure and also carefully consider preemptive investment in new technologies. And by doing so, we will focus on timely development of new technologies to help competitiveness of new models launched by our customers and heighten the entry barrier to the smartphone panel business.
Kim Kyu-Dong
Chief Executive Officer, LG Display
Thank you. We will take the last question.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
The last question will be presented by Won Seok Jeong from M-Securities.
Moderator
Investor Relations Moderator
Please go ahead with your question.
Jung Ho-Seok
Analyst, IMG
Hello, I'm Jung Hoseok from IMG. Thank you for the opportunity to ask me a question. I'd like to ask you a question about auto. Right now, the auto business is reducing sales by about 10% per quarter. Recently, the demand for OEMs has been increasing, and the competition between display companies seems to be worsening. However, since auto is based on demand, My question is on the auto business.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
The auto business for the company continues to maintain at around 10% share out of the total revenue. But then also we see that for the OEMs, the demand is really slow to recover. And also competition in the display business continues to get tougher. Now, we understand that the auto business is relatively stable compared to others because it is based on the orders. Then the question is, what is the company's current status in terms of the auto business and the profitability? And there was also an update once about the order backlog. So can the company provide the update again in terms of the order backlog today? And what is the expectations of the revenue growth in the future?
Son Ki-Hwan
Head of Auto Marketing and Product Planning, LG Display
Yes, I'm Sung Gi-Hwan from Auto Marketing. It is true that the market environment surrounding the auto business continues to be difficult in terms of demand and competition. Recently, the global car market has seen progressive recovery since COVID-19, but this year, we expect car sales to re-grow due to the influence of the Middle East war and inflation. In addition, the uncertainty of the concept and the general environment, semiconductor supply issues, Thank you.
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
This is Vice President Son Ki-hwan, Head of Auto Marketing and Product Planning, responding to the question. Now, it is true that the market environment around auto continues to be challenging, with demand and competition both remaining challenging. The global auto market has also been showing gradual recovery since COVID, but auto sales growth is expected to be negative this year due to the Middle East war and inflation. Not only that, but combined with other factors like tariffs, uncertainties in the trading environment, semiconductor supply issues, and slower consumer sentiment, real recovery in the auto market is likely to be postponed until next year.
Son Ki-Hwan
Head of Auto Marketing and Product Planning, LG Display
Even in this difficult market environment, Dangsan continues to run a stable business based on strategic customers. The LTPS LCD business has maintained stable performance this year based on strong vehicle sales from North America, Korea, Japan, and other major strategic customers. The OLED business was quite difficult due to the lack of electric vehicles sold by European OEMs and the delay in the production schedule of some new cars,
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
Despite such constraints, the company is maintaining its stable business operations with focus on our customers. The LTPS LCD business has kept up its consistent performance based on solid sales by major strategic partners in North America, Korea, Japan, and others. OLED has struggled a little due to the slower sales of European OEMs EV and delay in mass production of some new models, but we do expect stability to settle as the existing projects move into mass production.
Son Ki-Hwan
Head of Auto Marketing and Product Planning, LG Display
In the medium term, we will continue to expand the display size and large-screen For the medium to longer term,
Kim Kyu-Dong
Vice President, Finance and Risk Management, LG Display
We see high growth potential in the auto display market thanks to wider adoption of vehicle display and larger panel size. It is true that strong growth potential is inviting more competition, but the company will achieve competitive advantage in the market and solidify our business base with our differentiated vehicle tandem OLED, LTPS LCD technology, and improvement in cost competitiveness.
Son Ki-Hwan
Head of Auto Marketing and Product Planning, LG Display
And about the order backlog that you asked about, please understand that we are not at liberty to disclose the exact size given the competing market environment and confidentiality with our customers.
Kim Kyu-Dong
Chief Executive Officer, LG Display
This concludes LG Display's Q3 2026 Earnings Conference Call. We thank everyone for joining us today. Should you have any additional questions, please contact the IR team. Thank you.