Global Times - Domestic TV giant to move into LCD

Domestic TV giant to move into LCD

Source: Global Times
[01:09 November 18 2009]
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By Wang Xinyuan

TCL, China's largest television producer by output, said Tuesday it plans to raise funds from private investors for building a liquid crystal display (LCD) production line.

The new LCD line will use thin film transistors (TFT) and require a total investment of 24.5 billion yuan (US$3.6 billion).

TFT-LCD is regarded as the leading technology for monitors and television screens. The market value for TFT-LCD panels was $92.4 billion in 2008 and is estimated to reach $133.7 billion in 2015 worldwide, said TCL in a statement filed with the Shenzhen Stock Exchange Tuesday.

TCL will raise 5 billion yuan ($7.32 billion) through private placement to form a 50-50 joint venture with Shenzhen Shenchao Technology Investment for the new production line. The remaining capital will be financed through bank loans or other unspecified sources, according to the statement.

The construction of the line is planned to start in January next year and the joint venture is expected to begin producing by the end of 2011. The annual capacity is estimated to reach 14 million LCD TV sets, said the statement.

The TFT-LCD project is of major significance for the domestic TV industry, according to Li Dongsheng, chairman of TCL.

"The local company's expansion into the production of core parts signals the completion of vertical integration for flat-panel TVs, which will help raise the company's overall com-petitiveness,"Li told China Securities News.

This is an important breakthrough for Chinese LCD TV producers, said Liu Yongqiang, director of thehome appliance section at the China Chamber of Commerce for Import & Export of Machinery and Electronic Products.

Currently Chinese TV producers lag behind on LCD technology, and most of them simply assemble LCD parts for foreign producers. The domestic TV industry relies on imports of LCD TV panels and has no say on price. Domestic production of the TFT-LCDs will help lower TV producers' purchasing costs and increase Chinese companies' access to technology, Liu told the Global Times.

China has become a hotbed for LCD production recently. LG Display started a $4 billion joint venture in Guangzhou, Samsung Electronics spent $2.3 billion on a plant in Suzhou, and Sharp opened up a plant in Nanjing.

"As far as I know, about five or six LCD production lines are either under construction or already agreed upon with foreign partners,"Liu said, warning that the sudden surge of investment in LCD production lines might lead to overcapacity in two or three years.

But the investment is not risk free.

Since TCL has never been involved in LCD production before, it may need to set up a technology team to support the production line, experts say.

"It takes at least two years to produce TFT-LCDs. However, with technology developing so fast, new systems like organic electroluminesence display, which is already produced in Japan, could replace LCD [by the time TCL's TVs start coming out],"said Lu Renbo, director of Consumer Electronic Product Survey Office at the China Electronics Chamber of Commerce.