Now It’s China’s Turn - Domestic Gen 6 LCD Production Announced

Now It’s China’s Turn - Domestic Gen 6 LCD Production Announced

October 17th, 2006

We picked up a story on the wire service this morning confirming partial reports seen all month of a new LCD plant to be built in China by Shenzhen Julong Opto-Electronics. Details have finally emerged that the plant is to be a Gen 6 facility built to the tune of $2.3B with a targeted capacity of 90K units per month (almost 1.1M panels per year) and scheduled to be in full production by 2008.

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly

This is a big deal on two fronts. One, this is the first Chinese owned Gen6 facility on the mainland, and two, it means that many of the domestic LCD brands can now begin to source larger panels from a domestic source.

Up until now most large panel LCD production in China has been limited to assembly of LCD-TVs from panels made in Taiwan, Korea or Japan. The new Gen 6 investment is in line with China’s push to bring to its shores core high technology production.

The report didn’t disclose if the new Gen 6 plant will be funded by current members of the joint venture company or if outside investment will be needed. Back in March 2006, BOE (short for Beijing Orient Electronics) China’s biggest LCD maker, invested $1M in Shenzhen Julong Opto-Electronics to become the group’s biggest shareholder at 40%. At that point, Shenchao Technology Investment held 20% and four other manufacturers including TCL, Skyworth, Changhong, and Konka, own 10% each. There is also a non-disclosed portion owned by the Shenzhen government.

In 2004 BOE invested in a Gen5 line in China based on advanced fringe field switching (AFFS) technology it acquired from Korea’s Hydis group. The company first licensed AFFS and then went on to purchase Hydis from cash-strapped Hynix Semiconductor in 2003 for $380M, forming a new company, BOE Hydis. The venture has since fallen on hard times and applied for court receivership in Seoul, Korea this past September.

Interestingly, a Korean union group accused BOE last month of trying to steal cutting-edge display technology from its Korean partner Hydis. They claim the Chinese partner did little to ensure the success of the venture and was only interested in a technology transfer of the advanced LCD switching process.

Whatever the outcome of the Korean technology leakage charge, BOE and its partners with the AAFS technology in-hand, will work to develop cutting-edge large LCD panels for the display hungry domestic Chinese market in time for the 2008 Olympics and DTV era beyond.

But the rival manufacturers are far from standing still, and China has a long way to go to catch up. For example, Taiwan’s CMO has announced 8G plans and is busy ramping its 7.5G line as well. The Koreans are playing catch-up with Sharp, working on 8G and Samsung has made some overtures regarding 9G production. We’ve also heard rumors of Sharp getting much more serious about Gen10 while the paint still dries on its new Gen 8 facility (See Display Daily July 20, 2006).

Suffice it to say we are in for some rather large boosts to LCD panel capacity and with China establishing large display production; planners should be taking a hard look at worldwide capacity verses demand numbers. –SS