Import tax increase to boost LCD panel sector

The tariff markup applies to 32in and larger LCD panels without backlight.

The government measure aims to encourage the adoption of locally made panels as LCD production expands.

Under efforts to advance the local LCD panel industry, China has raised tariffs on imported units to 5 percent from 3 percent. The tax applies to 32in and larger variants without backlight. The measure is aimed at reducing dependence on foreign suppliers. Many TV manufacturers in mainland China still obtain the input from South Korea and Taiwan providers such as LG Display, Samsung, Chimei Innolux and AU Optronics. In 1Q12, for instance, six of the country’s major TV makers sourced 33 and 21 percent of their panels from the last two, according to WitsView. LG Display and Samsung accounted for 32 percent of the requirement. Domestic suppliers BoE Technology Group Co. Ltd and CSOT, on the other hand, only constituted 11 percent.

The government hopes higher import duties will encourage businesses to adopt locally made panels as LCD production expansion takes off.

The 12th Five-Year Plan underscores the development of the LCD panel industry, particularly 6G TFT LCD production and the use of the latest technologies and manufacturing processes. Such initiatives will be geared toward the establishment of a complete supply chain.

CSOT aims to boost monthly glass substrate output at its 8.5G plant to 100,000 units by year-end from 10,000 units in 4Q11. BoE plans to increase its 30,000-unit yield each month to 90,000 units. The company’s 6G facility has been churning out 100,000 glass substrates every month since starting mass manufacture in 4Q10. CEC-Panda produces 80,000 units per month.

Industry watchers project the government will increase tariffs to 8 to 10 percent in 2013 to boost the competitiveness of the local panel industry. China’s import taxes on LCD panels are lower compared with Brazil,
India and Russia.

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TFT-LCD modules: R&D plays up touchscreen, LED backlight

Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.

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