LG Philips suffers from flat market
CRT vendor blames demand for flat panel TV for European troubles
LG Philips Displays, the world’s largest manufacturer of television cathode ray tubes (CRTs) has blamed the surge in demand for flat panel TVs as the reason behind it filing for insolvency protection.
Last week the vendor announced that it had filed for insolvency protection for its European holding, one of its Dutch subsidiaries and its German arm, due to worsening conditions in the CRT market and unsustainable debt.
“Over the past year, LG.Philips Displays and other CRT manufacturers have seen an unprecedented decline in the market for CRTs, especially in Europe. The demand for new flat panel televisions, including liquid crystal display (LCD) and plasma televisions, has surged dramatically, as these alternatives have dropped in price and become cost competitive faster than anticipated. Although demand for CRTs has dropped precipitously in mature markets, global demand for CRTs remains strong, especially in emerging markets," said the company in a statement.
The two parent companies – LG Electronics and Philips – wrote off their stakes in the CRT manufacturer at the end of last year.
The financial position of LG Philips Displays' operations in France, Czech Republic, Slovakia, Mexico and the U.S. are being reviewed but the vendor said its plants in Brazil, China, Indonesia, Korea and Poland are, in principle, unaffected.
The company said its factories in the UK and the Netherlands are economically viable and are expected to continue production. These operations represent more than 85 per cent of LG.Philips Displays’ production capacity employing 15,000 people.
As a result of the insolvency filings, 350 employees at the company’s operations in Eindhoven, the Netherlands and 400 employees in Aachen, Germany are affected.
“We deeply regret this outcome and the painful impact these filings will have on our valued employees and the communities that have supported us over the years,” said J.I. Son, president and chief executive of LG.Philips Displays. “Unfortunately, market conditions and our financial situation have made this very difficult decision unavoidable.”