Phillips Pulling Out of LCD Market

Gerard Kleisterlee, chairman and CEO of Philips, said, 밯e will sell all of our shares of the LG-Philips liquid crystal display (LCD) venture between LG Electronics and Philips.?It is the first official announcement from Philips that it will sell all stock in its joint LCD business. On November 26, he was asked about this and he responded, 밃s the price of LCD panels is too volatile, its profits are unreliable. We plan to sell the stock according to market principles. We will choose the best way to maximize shareholder profits.?

He strongly denied recent speculation in Korea that Philips will strike an LCD deal with Toshiba, a Japanese company. He declined to talk about a timetable for selling shares.

Phillips?decision to minimize the shock to the market is out of respect for its investment partner, LG Electronics.

Kang Yoon-heum, an analyst at Daewoo Securities, said, 밣hilips has not been able to find a company who can buy all the stocks, worth 3.4 trillion won, at once.?Stock experts expect that Philips is likely to start selling next July when 30 percent stock holding limits will expire according to contract terms with LG.

Kleisterlee said, 밯e will diversify the suppliers of display panels that are used to make big-screen TVs. Taiwanese and Japanese companies will become our another suppliers.?Under contract terms with LG Elec, 25 percent of LG.Philips?LCD output goes to Philips. When Philips multiplies its supply channels, it is likely to hit the joint LCD business hard as sales connected with Philips decline.

jaykim@donga.com