LG to shut down solar panel production as costs pile up

South Korea’s LG Electronics Inc (KRX:066570) on Wednesday announced plans to shut down its global solar panel business, hurt by the rising material and logistics costs and supply chain disruptions.

“The decision comes as uncertainties in the global solar panel business continue to increase due to a variety of contributing factors, including the intensification of price competition and the rising cost of raw materials,” LG said in a press statement.

The group’s intention is to focus on other businesses and sustainability products and solutions, including energy storage systems (ESS), energy management solutions and others.

“LG will leverage its renewable energy expertise to unlock value for customers in new ways,” the company said.

The move has already been cleared by the company’s board of directors. The company’s exit from the solar market is expected to be completed by June 30, 2022. Meanwhile, solar panel production will continue until the second quarter so as to keep inventory for future service support.

LG’s solar panel business was run by its Business Solutions (BS) Company. According to the group’s latest financial report, the subsidiary booked a KRW 35.1 billion (29.4m/EUR 26m) operating loss in the fourth quarter of 2021 due to the solar business’ woes. Following the shutdown, BS will operate in the Information Technology (IT) and Information Display (ID) markets.

LG has been involved in the mass production of solar panels since 2010. Apart from factories in South Korea, it has a 500-MW production base in Huntsville, Alabama, that was opened in 2018 to make photovoltaic (PV) modules. The exit from the solar business will affect about 160 employees and 60 contract workers in Alabama.

The South Korean group noted it will keep its support for owners of existing solar panels over an unspecified period of time after the closure of its solar business.

(KRW 1,000 = USD 0.839/EUR 0.740)

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