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Struggling Chinese LCD firms to merge

Posted: 12 Jan 2007 ?? ?Print Version ?Bookmark and Share

Keywords:TFT-LCD? LCD? panel? display? BOE Technology?

Looking to improve their lot against global giants, three Chinese TFT-LCD makers are planning to merge in June if they can come to an agreement by the end of this month. The deal would create a business with annual revenues topping $1 billion.

The companies, BOE Technology Group, SVA Electronics and Longteng Optic-electronics Corp., together operate six legacy LCD lines with a combined capacity of about 200,000 panels per month. Production is limited to 15-, 17- and 19-inch panels, suitable only for commodity notebook PCs and monitors.

The move isn't expected to create waves anytime soon. Compared to competitors in Taiwan and South Korea, these companies are small. Researcher DisplaySearch puts the market share of BOE and SVA at only 4 percent; adding in Longteng bumps it up marginally. Also, these companies are outside of the LCD industry sweet spot, which in 2006 covered 32-, 37- and 40-inch panels and probably will be 42-inch this year, said Kathleen Zhang, a China-based analyst for market watcher iSuppli Corp.

The Chinese government is targeting the LCD industry for major growth, hoping to see a handful of fifth-generation LCD production built lines by 2008, with additional sixth- and seventh-generation lines slated for 2010. Currently, China is home to two operational fifth-generation fabs and another that will come online soon.

SVA, in a partnership with NEC, operates a fifth generation plant and had hoped to bring a sixth generation plant online in 2008, but those plans may be delayed if a new company is formed, a spokesperson said. BOE is also seeking funds for a sixth-generation plant. A few Chinese TV makers, such as Changhong and Skyworth, are also building LCD production lines.

Growth in China's TFT-LCD industry could hit 35 percent in 2007, followed by 50 percent growth in 2008, as local and foreign companies look to expand their facilities in China, according to Semiconductor Equipment and Materials International.

- Cai Yan
EE Times

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