SinoCast recently reported that Corning, the world’s largest LCD glass substrate manufacturer, is considering building a new LCD glass fabrication line in Shenzhen, Guangdong province. This is in addition to the fifth-generation (5G) glass substrate fab in Beijing, which is scheduled to be operational by March 2008. As the leading supplier of LCD glass, following what Corning does is often a good indicator of where the LCD industry is headed.

Dave Wares
Insight Media Analyst

For example, Corning’s continued expansion in China is part of a growing trend of TFT-LCD investments. The Chinese government has targeted the LCD industry for major growth, hoping to secure a larger percentage of the approximate $50B to be invested worldwide in the industry over the next three years.

The 2008 Beijing Olympics and the 2010 FIFA World Cup events are expected to fuel continued growth in the domestic Chinese LCD TV market, which is forecast to exceed 25M units by 2010, approximately 20% of the global demand. Taiwan’s Industrial Economics and Knowledge Center (IEK) forecasts that China will need at least four 7.5-generation TFT plants by 2010 to meet the strong domestic demand.

The Chinese government is also stressing the importance of locally sourced components, materials and equipment and the vertical integration of the panel production lines. Such a plan is needed as China’s three leading Chinese TFT manufacturers SVA-NEC Liquid Crystal Display (SVA-NEC), BOE Optoelectronics Technology (BOE OT), and Info Vision Optronics (IVO) had to merge recently as they were struggling financially. Why? In part, because of their relatively strong dependence on an overseas supply chain.

If developments over the last year or so are any indication, China appears to be on track. On August 27th 2007, the government officially opened the China (Shanghai) FPD Industry Park with the objective of encouraging a cluster of FPD companies to cooperate on R&D and improved competitiveness.

It is anticipated that additional 5G lines will come on line within the year and BOE OT plans to have a 6G plant operational by the end of 2008. According to Displaybank, SVA-NEC will be the first Chinese-based panel maker to invest in a 7G line, with production forecast for the third quarter of 2009.

In addition to Corning’s glass substrate investments, the SVA-NEC and NEG (a second major supplier of glass substrates) joint venture has already commenced production. On the component side, SVA Electron and Fujifilm established a joint venture for color filter manufacture in November of 2006, while Nitto Denko (polarizer), Efun (prism and diffuser sheets) and Coretronics (BLU) have all expanded their Chinese investments. Further, AUO and CMO have collectively invested over $400M in the expansion of their back end module production facilities in China.

It probably comes as no surprise that China’s TFT-LCD industry appears well positioned for strong growth. But this begs the question; will China’s growth expand the pie or will it come at the expense of other LCD producers? In the short term, the answer is that China’s expansion will mostly fuel domestic demand but the longer term trend will be troubling for existing component and panel suppliers. Stay tuned.