Sharp Chasing Technology

Atul Goyal, CLSA research analyst, thinks Sharp is making a mistake by chasing technology with its new Sakai-based LCD factory, the world’s largest. I beg to differ. Sharp is leading in areas that give the company a technological advantage and the size gives it a cost advantage. UV2A is a good example of both. Sharp’s new liquid crystal alignment technology improves contrast, lowers power consumption as well as reduce manufacturing costs. Sharp’s 10th generation LCD fabrication is the most expensive manufacturing site built in Japan’s history. Daisuke Wakabayashi writes:

Sharp has decided to try and cut costs by moving suppliers on site, a kind of hyper-‘just-in-time’ delivery system.

There is a term for this: co-location. There is nothing hyper about it. Co-location has been going on for many years. As LCD fabs become larger it becomes increasingly difficult and costly to transport very thin but very large LCD glass substrates. LCD glass suppliers such as Corning and AGC have been co-locating at TFT LCD manufacturing sites since around sixth generation LCD fabs were constructed.

It remains to be seen whether it makes sense for Sharp to keep seeking ever more-sophisticated production in Japan, or, as competitors have, to simply use less advanced production techniques at lower costs in places like China.

Most of the world’s LCD panel manufacturing is done in South Korea, Japan and Taiwan. LCD panel production requires very little human intervention, but does require advanced technologies in many areas. After the LCD panels are produced they are shipped mostly to China where they are modularized: people put together the LCD panel with backlight units, multiple PCBs, LCD casing, etc. The modularization process is where costs can be saved by moving to lower-labor countries like China. LCD manufacturers have been doing this for quite some time, including Sharp. To assume that Samsung, LG Display, AU Optronics (AUO), Chi Mei Optoelectronics (CMO) and others are using “less advanced production techniques at lower costs in places like China” to manufacture LCD panels is absurd. All of these companies search for and develop advanced technology to improve display performance while reducing manufacturing costs. Source: WSJ

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