DigiTimes is reporting that Chi Mei Optoelectronics (CMO) currently has no plans to resume construction of its next generation LCD fab. According to Jyh-Chau Wang, CMO’s new president, the company will not resume building its G8.5 LCD fabrication plant and has no clear future plans for a G10 or larger LCD plant.
Instead of focusing on capacity expansion over the next 10 years, CMO will instead improve its operating efficiency and profitability. According to Wang, the overall production costs, glass substrate cutting efficiency and the costs associated with transporting G10 and larger glass substrates are the major challenges that CMO is evaulating for future capacity expansion.
Building increasingly larger TFT LCD fabrication plants has been the method by which you improve glass efficiency toward manufacturing larger LCD panels. With larger LCD panel demand expected to grow steadily over the next several years, the LCD manufacturer who can more cheaply produce those large LCD panels will have an advantage. And the company that makes the same product cheaper usually has a profitability advantage. At least that’s how I understand it.
Of course, the dynamics of capacity expansion, the impact that has toward LCD supply and demand, LCD prices, etc. are difficult to understand completely. A major supplier like CMO can impact the overall supply and demand of LCDs especially when very large LCD fabs are built. It seems CMO might be running out of financial wherewithall to continue building its G8.5 fab. But it is certain that the current LCD market has something to do with the decision. According to DisplayBlog’s Monthly Flat Panel Display Tracker, the most popular sizes have shifted from 32″ to 40″ and 52″. In order to efficiently produce these LCD panels, especially 52″, it would be beneficial for a company such as CMO to have a G8.5 operating with high efficiency and low cost.