All of the flat-panel displays made in fabs of Gen 6 or above come from within (or very close to) a golden triangle of display manufacturing whose vertices are at Tokyo, Japan; Seoul, Korea; and Hsinchu, Taiwan. That’s about to change.

Ken Werner
Senior Analyst and Editor

Samsung Electronics announced last week it plans to build a $2.3B Gen 7.5 plant in Suzhou, China, which is west and north of Shanghai. Actual construction is subject to the approval of the South Korean and Chinese governments. Samsung’s LCD factories in Korea are humming, which is why they are looking for additional options (the photo shows the current 94.6% utilization rate at the company’s mammoth Gen. 7 and 8 plant in TanJeong, Korea, which Insight Media recently visited).

The announcement came hard on the heels of one from Samsung arch-rival LG Display. LGD said it would spend $4B for an LCD plant in Guangzhou, which is Northwest of Hong Kong and about 800 miles south and west of Shanghai. Add Guangzhou as a new vertex, and we have a quadrangle.

Sharp is establishing a JV with China Electronics Corp. to make LCD-TV panels in Nanjing, which is near Suzhou and already a center for back-end display assembly. Nanjing is also home to Southeast University, which has a good display program and is supplying well-trained engineers for the industry.

AUO is talking about establishing a Chinese plant. And China’ BOE is reportedly planning to build China’s first home-grown Gen 8 fab, but take this with a grain of salt. (BOE’s Gen 5 fab suffered from extended yield problems, which may or may not have been solved.)

All of this comes as the flat-panel industry is gleefully emerging from hard times. AUO turned a profit in Q3, with revenues rising 35% quarter-on-quarter and shipments of large LCD panels setting a record. Those record shipments were made possible by AUO’s new Gen 8.5 plant ramping up on time, said AUO CFO Andy Yang. The plant was producing 30,000 substrates per month in September, and AUO says that will reach 40,000 by the end of the year.

Third-quarter revenues at LG Electronics’ home entertainment company rose by 23.9% on year due to rising demand for flat-panel TVs, and profits rose, in part, to structural improvements in the company’s PDP business, LG said.

Industry revenues are down from last year despite higher unit sales, but that will change in 2010, according to DisplaySearch.

The bottom line is that the panel makers will now have money to invest in their next round of plants, and, to a significant degree, those plants will be in China if South Korea and Taiwan can swallow hard and allow those jobs to go to their large next-door neighbor.