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IR News

05/30/2007

LG Opens European LCD Cluster in Poland

LG.Philips LCD, LG Electronics, LG Innotek and LG Chem (collectively “LG”) today held an opening ceremony for its European LCD cluster in Wroclaw, Poland, the company’s third LCD cluster worldwide.

Approximately 500 people attended the complex’s opening ceremony, including LG executives, Polish government officials, journalists and citizens. Elżbieta Dorota Wilczyńska, Polish Deputy Minister of Economy; Wojciech Szelągowski, Vice President of PAIiIZ (Poland Agencja Informacji i Inwestycji Zagranicznych S.A.); Rafal Dutkiewicz, Mayor of Wroclaw; and Ryszard Pacholik, Mayor of Kobierzyce Commune were the guests of honor. Also in attendance were Bon Moo Koo, Chairman & CEO of LG Corp.; Yong Nam, Vice Chairman & CEO of LG Electronics; Young Soo Kwon, President & CEO of LG.Philips LCD; James Kim, President of LG Electronics Europe and Simon Kang, CEO of LG Electronics Digital Display Company.

A total of 807 million euros is expected to be invested in this 1.5 million-square meter scale cluster until 2011, including 429 million euros from LG.Philips LCD, 103 million euros from LG Electronics, 58 million euros from LG Innotek, 40 million euros from LG Chem and 177 million euros from partner companies. Until now, these companies have created approximately 4,200 local jobs in total.

Combined Efficiencies
LG’s Poland cluster, in Kobierzyce near Wroclaw, will help it to better serve its customers in Europe where the LCD market accounts for 37 percent of the global LCD TV market. LG will incorporate a one-stop manufacturing system, allowing LCD products and components to be produced and assembled at a single location. This includes everything from TFT-LCD display materials from LG Chem and invertors/power modules from LG Innotek to LCD modules made by LG.Philips LCD and finished LCD TV sets from LG Electronics.

“We are excited about enhancing the economic collaboration between Poland and LG, which began in 1999 when we first started our TV plant in Mlawa,” said Yong Nam, Vice Chairman and CEO of LG Electronics, “With this highly efficient one-stop manufacturing system, we can provide faster response to regional customers and markets while increasing competence in cost and price. As the demand for LCD TVs is increasing more rapidly in Europe than any other region, the Poland cluster will play a core part in LG’s overall LCD-related businesses. Now, with five major LCD manufacturing strongholds strategically placed around the globe, we are in a better position to achieve our goal of being the industry’s world leader.”

Piotr Grzegorz Wozniak, Minister of Economy added, “Development of the LCD TV and monitor manufacturing sector in Poland in recent years has been unusual on a European or even world scale. The creation of this LG cluster in Wroclaw – the third such venture in the world - is further proof of how important our role is in the European market. According to a Ministry of Economy estimate, between 35 and 38 million monitors will be produced in Poland by 2010. It’s not an exaggeration to say that we are now the pathway to Europe for this industry.”

“We are proud that is currently the largest LCD manufacturing Centre in Europe. Thanks to LG’s investment, other foreign companies have also decided to build their factories in our community,” said Ryszard Pacholik, Mayor of Kobierzyce Commune.

LG chose Poland for the country’s advantageous geographic location, competitive workforce, established infrastructure and the high level support of the Polish Government. Centrally located within Europe and well-connected by infrastructure, Wroclaw guarantees LG’s ability to quickly supply any corner of the European market. Wroclaw, the nation’s educational and economic center, is also well-known to offer a trained high quality labor force and to have well established infrastructure, including efficient road networks and excellent power supply. The synergies created by LG’s leading LCD production technologies and Poland’s various advantages will make LG’s LCD cluster in Poland a European hub for the digital display production.

Each Company’s Role in the LCD Cluster in Poland
LG’s Poland cluster will help achieve synergistic gains through collaboration among the four LG companies.

LG Electronics’ LCD TV set assembly plants, measuring 396,696 square meters, have a planned capacity of 2.4 million units in 2007, expanding to 10 million units per year by 2011. The company produces Full HD LCD TVs in 37, 42, 47, 52 and 55-inch sizes as well as 32-inch HD TVs. This cluster will play a critical role in supplying the European LCD market, which as of March 2007 accounted for 26.6 million units annually and 37 percent of the global market. (Source: DisplaySearch, March 2007). The company plans to overtake the European market by increasing brand investment and cultivating specialized sales forces, as well as expanding high-end goods distribution channels and strengthening its partnerships with pan-European dealers. The company will enhance its competency in Europe through differentiated, localized marketing programs and country-specific R&D strategies for the UK, France, Germany, Italy and Spain.

LG.Philips LCD’s LCD module plant in Poland, measuring 661,160 square meters, has a planned initial capacity of 3 million LCD modules annually, expanding almost four-fold to 11 million modules by 2011. The company started mass production at the plant in March, this year and is producing LCD modules mainly for 32-inch and larger LCD TVs. Many of LG.Philips LCD’s customers have already built or are building facilities in the region and through the establishment of a base in Poland, the company has been able to secure a strong foundation for mutual growth with its customers in the fast-growing European LCD TV market. Through local production, the company plans to provide services tailored to the needs of its various customers, offering a timely and stable supply of optimized products and services.

LG Innotek will produce and supply invertors and power modules, both of which are also major components of LCD, covering 46,281 square meters in the cluster.

LG Chem manufactures a wide range of products from petrochemical goods to rechargeable batteries and TFT-LCD display materials, critical for LCD manufacture. The company’s estimated annual production capacity of polarizer in the Poland cluster is 3 million sets. The scale of the company’s plant in the cluster measures 92,562 square meters.

LG’s Other Strategic LCD Production Clusters
LG has been strategically implementing to build the optimized global LCD production system to better serve its customers around the world and has created two other LCD clusters prior to launching the LCD cluster in Poland. Its two other LCD clusters are located in Paju, Korea and Nanjing, China. Three of LG’s LCD clusters in Korea, China and Poland collectively cover 8 million square meters.

LG is confident to grow its LCD cluster in Poland to be the European digital display production hub by using its successful experience running the clusters in Korea and China. LG will boost cooperation among these three clusters by working on cooperative projects in new technology development, purchasing system integration and talent sharing.

The Paju Display Cluster, covering 4.5 million square meters in total, is the largest digital display cluster in the world. The section of the complex for LG.Philips LCD covers 1.7 million square meters. It is home to LG.Philips LCD's seventh generation LCD panel plant which is the largest in the world. Approximately fifty of LG.Philips LCD's upstream and downstream partner companies will eventually become part of the cluster, including four LG companies: LG Electronics, LG Chem, LG Innotek and LG Micron.

The Nanjing Display Cluster in China, covering 2 million square meters in total, includes LG.Philips LCD’s first overseas LCD module plant and facilities for LG Electronics and other components manufacturers. The Nanjing cluster also features plasma display module and TV set plants.

LG expects to enhance its leadership in the industry through the synergistic effects achieved by its Poland LCD cluster, now one of the most important strongholds in the company’s entire business.

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