LG InnoTek will sell its patents and equipment related to its LED business to a Chinese LED company, TheElec has learned.
The South Korean component maker will clean out equipment related to LED at its Paju plant within the month, people familiar with the matter said.
LG InnoTek will handover some 10,000 patents related to LED to its Chinese counterpart.
Besides the payment, this will allow the Korean firm to save around 1 billion won in maintaining those patents.
Last year, LG began talks to sell its LED patents and equipment for 100 billion won in turn-key fashion.
The Chinese company will be able to make a profit from the LED business, especially in areas related to lighting, by relying on subsidies given by the regional government.
It will also be able to offer more LED products in the market. The secured patents will also allow it to defend itself from potential lawsuits filed by rivals. LG InnoTek has invested largely in its LED business before selling it, especially in ultraviolet (UV) LED areas.
The deal to sell the business likely went through because of the high-value patents related to UV LED.
Some have voiced concern over the selling of UV LED patents as they believed LG InnoTek could license them instead.
The South Korea component maker decided to exit the LED business in October, 2019. In the second quarter of 2020, it attempted to sell its LED facilities in China and South Korea, but these talks were delayed due to the COVID-19 pandemic.