LG Chem is planning to exit the display pressure sensitive adhesive (PSA) business, people familiar with the matter told TheElec on Monday.
It comes four years after the South Korean company bought the business from LG Hausys.
The company has recently notified the plan to its subcontractors for its film business, the people said.
PSA research and development personnel has also been transferred to the battery business, they said.
The adhesive are used to attach the film on the substrate during display production. It is also using for sealing in display production.
Adhesive fixes the film on point and prevents loss of light on panels, which is important for clarity and reliability.
LG Chem bought the business from LG Hausys in 2016 for 80.5 billion won. At the time LG Chem said it saw growth potential in the sector.
The business one time brought in 200 billion won in sales a year but this has dropped to a 500 million won a month. Sales for use in Liquid Crystal Display (LCD) and organic light emitting diode (OLED) has dropped considerably, the people said.
LG Group is reducing its LCD business in light of the rise of Chinese rivals. LG Chem exited LCD polarizer business earlier.
Demand for adhesive in OLED, specifically optically clear adhesive, has also fallen as most companies are not using touch screen panels and using encapsulation and on-cell methods to make touch sensitive OLED panels.
For on-cell OLED, adhesive are only used when the organic materials and inorganic materials are stacked. Adhesive are also used to attach thin films on glass substrates that are later detached. LG Chem believes keeping the business for this limited application was insufficient to maintain profitability, the people said.
The South Korean companies prefers businesses that can boost sales by hundreds of billion wons with a small number of clients over a business with multiple clients but small sales per client.