LG Display Co., South Korea’s top display manufacturer, received a go-ahead from the Korean government to set up a new organic light-emitting diode (OLED) panel factory in China five months after it filed for approval.

The Ministry of Trade, Industry and Energy said Tuesday that it gave a conditional approval to LG Display’s plan to establish an OLED display production base in China. The display maker in July unveiled a plan to set up a joint entity in Guangzhou, China to produce 8.5-generation OLED displays and requested for the ministry’s approval for the plan.

In Korea, a company in the OLED industry is required to obtain the government’s approval for its plan to export OLED technology or invest in related production facilities in foreign countries because OLED technology is designated as one of the country’s core industries and technologies that can gain the government’s support including financial aid for development.

The Korean government gave a nod to LG Display’s plan after five months of review including two committee meetings with display technology experts and three sub-committee meetings. The Korean government was initially reluctant to approve the plan, citing possible technology leaks, but it has decided to allow LG Display to build the factory in China on expectations that the new investment would help with related sector’s growth and create new jobs.

But to minimize the risk of possible technology leaks to the neighboring country and job loss, the ministry demanded LG Display to increase its use of Korean-made display materials and equipments. Also, it requested the company to enhance its efforts to prevent any technology leaks and carry out its next capital project at home.

Currently, Korean display makers on average procure 30 percent of materials and 60 percent of factory equipment and facilities from local suppliers. LG Display was asked to help raise the country’s reliance on local suppliers to 50 percent and 70 percent, respectively, for materials and equipment procurement.

The display maker in July pledged to invest total 15 trillion won ($14 billion) in OLED display production by 2020 to meet burgeoning demand for OLED screens. The plan included spending 5 billion won on setting up a joint entity in Guangzhou, China to produce OLED panels for TVs. But its plan had been placed on hold for five months due to government’s review process.

LG Display shares closed Wednesday at 29,750 won, up 1.02 percent from the previous session.

By Lee Jae-cheol and Cho Jeehyun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]