According to David Hsieh, Vice President, Greater China Market, DisplaySearch, LG Display has delayed groundbreaking for its Gen 8 LCD fab in Guangzhou, China. Samsung, too, seems to be delaying its Gen 7 groundbreaking in Suzhou. AU Optronics is reconsidering building its Gen 7 fab in Kunshan. And finally Sharp seems to have cancelled its Gen 8 LCD fab, a joint venture among CEC-Panda and the Nanjing government. What’s going on?
Hsieh points out several reasons: LCD over supply, slowing growth in China, requirement to transfer technical know-how, and a shift to LCD cell and BMS business models. In the BMS model the system integrators build the backlight unit (BLU), LCD module (LCM), and system in one location to improve efficiency.
The LCD cell manufacturing process requires little labor and is equipment intense once tuned by experienced engineers. The import tax of LCD cells into China is just 3%. In conjunction with all of the aforementioned reasons it makes sense that LCD manufacturers in South Korea, Japan, and Taiwan are delaying and/or canceling plans to build LCD fabs in China, for now.