China FPD Market Expands to Meet Local Demand, Global Markets
China Government Approves Two Advanced Korean LCD Fabs
Foreign and domestic Flat Panel Display (FPD) investments are expanding to meet booming demand for TVs and other products in China, as well as to meet international demand. The State Department of China recently approved a Samsung Gen 7.5 in Suzhou and a LG Display Gen 8.5 in Guangzhou. Formal approval by the National Development and Reform Commission (NDRC) is expected soon. On the Japanese side, Sharp plans to transfer its 6th-generation line to CEC Panda. This wave of international flat panel manufacturing investments in China furthers the expectations that the country will see an increasingly dominant role in LCD and display manufacturing.
Chinese manufacturers are not standing still. The NDRC and Ministry of Industry and Information Technology (MIIT) have also been considering a Gen 8 for CEC Panda, a Gen 8 for BOE in Hefei, and a Gen 8.5 for Foxconn in Chengdu (DisplaySearch, Nov 15). If all proposed fabs come into production, the market share of China LCD panels will raise from 2.4 percent to 20 percent in the global market (DisplaySearch).
Meeting local demand is a primary driver. While manufacturing costs are a factor, a increasing consumer demand for LCD TVs in China is compelling China construction investments. According to DisplaySearch, LCD TV shipments in China will reach 39.2 million in 2010 and account for 22 percent of the world market. China will become the second-largest LCD TV market in 2010, and will become the biggest market in 2011. For LCD TVs with LED backlights, the penetration rate will reach almost 15 percent in 2010, and 20 percent for sizes larger than 40 inches.
Beyond TVs, mobile phones, notebook computers and new tablet PCs for both the China market and international export will also drive the display manufacturing base. China Mobile has about 500 million users, more than the combined populations of Britain, Germany and the United States, but still lags the world in the penetration of display-rich 3G services and smart phones. In tablets, Apple’s successful iPad will spawn approximately 24 new entrants, many of which will be made in China. Oppenheimer predicts that as many 115 million tablets will be sold in 2014.
Another new display growth opportunity is e-books. A new report from Forester revealed that customers will buy approximately $1 billion worth of e-books by the end of 2010. Despite this impressive number, the report also mentions that the e-book market has a lot of room to grow and a mere 7 percent of online adults that read books are currently reading e-books. Many future ebooks will be bought and made in China.
Incentives to Manufacture in China
The Chinese government imposes a 3 percent tariff on imports of cells below 26 inches to protect domestic panel makers, which have relatively small scale Gen 5 manufacturing capacities. There is no tax for cells above 26 inches. With more domestic high gen capacity being developed, import taxes on larger cells are likely to materialize the future furthering the incentive to locate display fabs in China.
According to Display Daily, “China is looking for both investment, and technology transfer to help leapfrog that nation into a world display powerhouse, as China moves up the technology curve supplying higher value-add products to both domestic and foreign markets.”
In addition to foreign investment, China-based manufacturers continue to grow in expertise, resources and capacity. Tianma Microelectronics, the largest manufacturer of passive and monochrome LCD's in China, has over 4,000 employees and their R&D Department is officially recognized as one of Top 3 R&D Centers of Guandong Province. The company is praised by Chinese State Scientific and Technological Commission as one of 76 Key High-Tech Enterprises of China.
BOE has over 500 display patents and employs over 12,000 employees. BOE owns six production bases, which are located respectively in Beijing (Gen 5, 100K monthly capacity and a Gen 8.5 with 90K per month capacity) , Chengdu of Sichuan province (G4.5 with 30K monthly capacity), Hefei of Anhui province (G6 90K monthly capacity), Gu'an of Hebei province, Suzhou of Jiangsu province and Xiamen of Fujian province.
As the China FPD ecosystem develops, local purchasing for equipment and materials are expected to dramatically increase. Purchasing practices will likely follow the Electronic Manufacturing Services (EMS) model of Foxconn and others where initial manufacturing and capital planning is based on developed systems and suppliers in Japan, Korea and Taiwan that will increasingly be displaced by lower-cost, local-service suppliers based in China. Local supply chains comprised of international suppliers with local offices and manufacturing in China, and local China-owned companies targeting long-term opportunities for growth in display marketplace will eventually dominate.
Capitalize on the Opportunity at FPD China 2011
To benefit from opportunities in the China display market, leading manufacturers and suppliers will exhibit at FPD China 20, which will be held concurrently with SEMICON China on March 15-17, 2011 in Shanghai. Leading display manufacturers Samsung, AUO, Chi Mei, Tianma, BCL and many more showcase their latest display products — and top equipment, materials and component suppliers will demonstrate the latest solutions at China’s largest display event.
In addition to the exhibition, the China FPD Conference will include keynote speeches, technical sessions and an executive forum with top industry leaders. Special Interests will cover latest issues including the localization, China tax policy, supply chain and logistics. The Next Display Zone will show the next major display technology and “Killer” application products. FPD China 2011 will attract more than 40 central and local governments to create opportunities for communication between governments and enterprises.
For more information, visit www.fpdchina.org
December 7, 2010