China pushes local adoption to support industry expansion.
China's production capacity is anticipated to surpass that of Taiwan in 2H12 and Japan in 1H13.
Ongoing efforts to boost China’s LCD industry are beginning to yield results based on 1H12 shipments and global share. These include measures to encourage local adoption and spur production expansion, in addition to the steps taken by individual companies to elevate panel quality and enhance overall competitiveness.
One such factor that increased domestic panel consumption is the adjustment in the open-cell import tariff that China imposes on 32in and larger LCDs. From 3 percent, it was raised to 5 percent beginning April this year, hitting most panel suppliers as they ship their products in this configuration. This has benefited homegrown companies such as CSOT and BOE Technology Group Co. Ltd. Both provide panels in this size, with BOE also offering 37in units.
The resultant markup in LCD panel costs has pushed almost all local TV makers and even Samsung and LG to source from BOE. Contributing to this decision to switch to lower-cost China LCDs is the expected price competition in the TV sector in 2H12.
This development is reflected in the deliveries of BOE, which jumped by 45 percent MoM and exceeded its target by 13 percent. In contrast, that of Samsung and AU Optronics decreased by 11 and 5 percent, respectively. Both dropped further in May, while BOE realized significant growth, overtaking these rivals and LG Display. In fact, BOE was able to corner as much as 20 percent of the 4.1 million-unit shipments to China in May.
TCL’s consumption of the panels produced by its subsidiary CSOT, meanwhile, has reduced the former’s orders from Samsung and Taiwan panel providers. CSOT shipped more than 1.3 million units in October last year.
Earlier in 1Q12, there was an increase in the LCD procurement of six homegrown TV brands such as Changhong, Haier, Hisense, Konka, Skyworth and TCL. From 5 percent in 4Q11, the rate rose to 11 percent. This upward trend is expected to persist, according to DisplaySearch.
Advancing the industry further is the operation of 8.5G lines of BOE and CSOT, in addition to their 8G units, ramping up local LCD production further.
Foreign investment also continues to pour in, by extension strengthening China’s industry position further. There is the construction of LG Display’s 8.5G plant in the Advanced Technology Industry Development District in Guangzhou, Guangdong province. The project is a venture among LG, the industrial zone and Skyworth Display, with respective shares of 70, 20 and 10 percent. The facility is expected to commence mass manufacture in 2H14.
Suzhou Samsung LCD (SSL) is also building a similar factory, with funding from Samsung, Suzhou Industrial Park and TCL. This will begin operating in 2013.
From these expansion undertakings, China’s 8G and higher production capacity is anticipated to surpass that of Taiwan in 2H12 and Japan’s in 1H13. By then, the country will become the world’s second-largest manufacturing base for LCD panels,according to DisplayBank.
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