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NEC to transfer TFT-LCD production to China JV

Posted: 22 Apr 2002 ?? ?Print Version ?Bookmark and Share

Keywords:NEC? TFT-LCD? Shanghai General Electronics?

NEC Corp. will transfer its production of amorphous TFT-LCDs to a joint venture in mainland China, having signed a letter of intent with Shanghai General Electronics (Group) Co. Ltd to establish a production venture in Shanghai by the end of this year.

Speakers and panelists at the SEMI FPD Expo 2002 repeatedly questioned the need for Japanese companies to continue production of LCDs in Japan, but the joint venture of NEC and SVA will be the first incidence of a Japanese company transferring its LCD production to an overseas operator.

"For NEC's LCD business, the alliance is affirmative. The LCD market will continue growing but it is a difficult market for Japanese companies to be competitive. Production should be taken to areas with cost advantage while Japanese companies had better focus on licensing their technologies," said Hitoshi Shin, first vice president of Merrill Lynch Japan Inc.

NEC and SVA plan to capitalize their joint venture at about $385 million, with SVA providing 75 percent and NEC providing 25 percent of the funding. The companies said they will invite additional investment from other sectors, such as materials manufacturers. The Shanghai-based venture, yet to be named, will be a comprehensive operation that handles product planning, development, manufacturing and sales of TFT color LCD modules, the companies said.

The joint venture will build a fabrication facility with a fifth generation line that can handle substrates larger than 1-by-1m. It is schedule to begin operations in the spring of 2004 with an initial head count of 1,200 employees.

NEC said it now holds about a 4 percent share of the world TFT market. Its sales for the just-ended fiscal year are expected to have dropped more than 30 percent from sales of about $1 billion the year before. NEC said it believes the business operated in the red for the year.

Shanghai-based SVA claims to be China's largest electronics group with revenue of more than $8.5 billion in 2001.

Earlier venture

NEC previously established a joint venture in mainland China involving semiconductors, forming Shanghai Hua Hong NEC Electronics Co. Ltd. in 1997, in which it holds a 28.4 percent equity investment. "NEC is the minor shareholder, [but] the business has been successful," an NEC spokesman said. "We are expecting the LCD joint venture will work in the same way."

NEC operates two TFT fabs in Japan, in Kyushu and Akita, which feature first-generation to third-generation technology. By the time the joint venture fab begins volume production in China, NEC will have sorted out new roles for the Japan fabs. In principle, the sites will focus on basic technology development of materials and manufacturing processes, and on value-added products that require customization.

? Yoshiko Hara

EE Times

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