* Aims to invest 15 trln won in OLED production through 2020
* Signals No. 1 large LCD maker shifting to OLED -analysts
* Q2 operating profit about $720 mln vs $40 mln a year ago
* Also plans to invest in China OLED production (Recasts and adds analyst comment, rivalry with Samsung)
SEOUL, July 25 (Reuters) - LG Display Co Ltd outlined plans to invest $13.5 billion to boost output of organic light-emitting diode (OLED) screens over the next three years, aiming to cement its lead in big panels for TVs and make inroads against rival Samsung in smartphone displays.
The investment plans, roughly 25 percent more than its usual capital spending on an annual basis, also signal that the South Korean firm is shifting its focus to OLED from liquid crystal displays (LCDs) as demand for thinner and more flexible panels surge, analysts said.
LG Display is the world's No. 1 LCD maker for televisions and also manufactures nearly all large OLED screens for televisions globally. But it has barely a foothold in the market for OLED smartphone screens where rival Samsung Display, a unit of Samsung Electronics, has a more than 90 percent share.
Apple Inc, one of LG Display's key clients, is widely tipped to adopt OLED displays for the iPhone 8 expected in the second half of 2017.
OLED screens are thinner and offer better picture quality than the mainstay LCD screens. They are also more flexible and consume less power.
The plans, which came in tandem with an 18-fold jump in second-quarter profit, includes a firm commitment to spend 7.8 trillion won ($7 billion) domestically by 2019.
Around 5 trillion won is earmarked for a new line for flexible OLED aimed at bolstering its position in auto displays and smartphones while 2.8 trillion won will go towards a separate new line for large-size OLED screens. Both production lines will be located in Paju, northwest of Seoul.
Its planned 15 trillion won investment over three years implies an average of 5 trillion won in capital spending per year, above its usual 4 trillion won, but analysts said it will probably not be enough.
"For small and mid-sized OLED, it is expected to receive additional investment from somewhere else, perhaps Apple," said Lee Min-hee, analyst at Heungkuk Securities.
"One production line for small and mid-sized OLED can require nearly 10 trillion won in investment. LG doesn't have the firepower to single-handedly build a lot of OLED production lines."
LG Display said it would not comment on client companies.
It also said separately that it would invest in large-size OLED production in Guangzhou, China, to respond to fast-growing demand for the screens in TVs in overseas markets. The company already has an LCD panel production plant in Guangzhou that began mass production in 2014.
The new China production facilities will be established through a joint venture with 2.6 trillion won in capital, of which LG Display will hold a 70 percent share.
LG Display's second-quarter operating profit soared to 804 billion won ($721 million) from 44.4 billion won a year earlier, albeit slightly short of a consensus estimate, as it benefited from a more profitable product mix of screens for ultra-high definition TVs and other high-end panels.
($1 = 1,114.2400 won) (Reporting by Joyce Lee; Editing by Edwina Gibbs)