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IP/97/264

Brussels, 2 April 1997

State Aids : United Kingdom Commission approves an investment aid package to LG Electronics Wales Ltd, South Wales

The Commission decided today not to raise objections to a proposed investment aid packages to LG Electronics Wales Ltd (LGEW) and LG Semcion Wales Ltd (LGSW). Both large undertakings are part of the Korean LG group and are located in Imperial Park Newport, an area that is eligible for regional aid. The Commission has arrived at the conclusion that the investment will certainly contribute to facilitate the development in a deprived area. The Commission also concludes that the state-supported investments in question will not create overcapacities neither in the monitor market nor in the television receiver market or in the semiconductor market for 64MB DRAMs and that the state aid on average will not have a significant impact on the price of these products. The aid intensities of the state aid measures for both companies are within the 20% net aid ceiling applicable in that region. The Commission has therefore concluded that the proposal complies with the necessary criteria for the Commission to approve aid of this nature.

The Korean LG Group is actively involved in virtually every sector of Korean industry, from chemicals, energy, electronics and machinery to metals, trade, services and finance. The group employs 126,000 people in 120 facilities across the world.

These investments and the related job creation are expected to be taken forward over a period of 5 to 6 years. The project with 6,100 jobs in total is supposed to be the largest job-creating inward investment ever brought to the EU.

LGEW is operating in the electronics market. In a first phase it will invest in the establishment of a television and computer monitor production facility and in a second phase in an assembly of colour display tubes and colour picture tubes for monitors, the automatic assembly of electronic and electrical components, and the manufacture of deflection yokes and fly-back transformers. It will invest in total £521m (ECU655m), creating 4,400 jobs.

LGSW, operating in the semiconductor industry, is investing £1,142m (ECU1,436m) in a wafer-fabrication plant, capable of producing 30,000 8-inch wafers per month, and an adjacent assembly and test facility. LGSW will initially be producing 64m DRAMs and later 256m DRAMs. It will create 1,700 jobs.

The UK authorities propose an overall state aid amount of £247m (ECU311m).


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