TFT-LCD Panel Makers Enter Into 8G Race

A new wave of competition lies ahead in the global thin film transistor-liquid crystal display (TFT-LCD) panel industry, as all of the top-five players in the arena are ready to jump into construction of eighth-generation (8G) production lines in order to embrace the lucrative business opportunities generated by the large-screen LCD TVs.

Industry exporters point out that one 8G TFT-LCD panel plant requires at least US$3 billion of investment. Relatively small panel manufacturers may be squeezed out of the industry, as the new-generation plants require a higher investment threshold.

SW Lee, president and CEO of Samsung Electronics' LCD branch, said at the Consumer Electronics Show held in early January in Las Vegas that Samsung is scheduled to kick off construction of a new 8G TFT-LCD panel plant in the second half of this year, with a total investment of more than US$3 billion. The South Korean panel maker's 7G facility has already started mass production with a monthly capacity of 165, 000 substrates.

Sharp of Japan is scheduled to commence mass production at the world's first 8G panel plant in July with an initial monthly capacity of 30, 000 substrates.

LPL, the world's No. 2 large-sized TFT-LCD panel maker, is also planning an 8G plant and is expected to announce the project soon. LPL's new 7.5G panel plant is now entering mass production.

In Taiwan, AU Optronics Corp. (AUO), the island's No. 1 and the world's No. 3 panel maker, is scheduled to start constructing a new-generation panel plant (very likely an 8G facility) in May this year at the Houli branch of the Central Taiwan Science Park (CTSP). AUO is also now accelerating construction of a 7.5G plant at the Taichung branch of the CTSP.

Chi Mei Optoelectronics Corp. (CMO), Taiwan's No. 2 and world's No. 4 panel maker, is constructing a 7.5G plant at the Tainan branch of the Southern Taiwan Science Park (STSP), which is scheduled to begin mass production in 2007, and has decided to set up a new plant (very likely an 8G facility) at the Kaohsiung branch of the STSP.

According to major TFT-LCD equipment suppliers, among the world' s top-five panel makers, only Sharp has mapped out a confirmed 8G substrate of 2, 160mm X 2, 460mm. As both AUO and CMO followed the 7.5G substrate specifications mapped out by LPL, the two Taiwan companies are expected to also follow LPL's 8G substrate size, further consolidating it as the market' s mainstream size.

Hsiung Hui, executive vice president of AUO, points out that a 6G panel plant with scale of economy costs about US$3 billion, and more will be required with every new generation. Smaller panel makers, the vice president adds, are expected to confront problems in raising funds for new-generation plants. This year, according to Hsiung, will be a critical period for major panel makers seeking to raise funds for 8G plants.

Large-size Tide

The mainstream sizes of LCD TVs in the global market keep getting bigger even as TV prices continue going down. According to forecasts made by DisplaySearch, the flat panel display (FPD) market researcher and consultant, global demand for LCD TV panels reached about 22.6 million units (compared with about 20 million LCD TVs sold) in 2005, and the volume is expected to grow to about 41.3 million units (compared with about 36 million LCD TVs sold) this year, representing an 83% annual growth rate.

The LCD TV market, with an 80% to 100% annual sales growth, looks very promising to TFT-LCD panel makers, which face the challenge of a saturated market for PC monitors. The booming business opportunities generated by LCD TVs have attracted the attention of not only panel makers but also IC, PC, and even cellphone manufacturers worldwide.

Samsung and LPL announced their 7G and 7.5G mass-production capabilities early this year. The two companies are battling, according to industry insiders, to establish a new global mainstream size, with Samsung seeking to establish 40" panels as the LCD TV standard, while LPL is championing the 42" size.

Samsung and LPL' s moves have forced Taiwan panel makers, which often fall one generation behind their South Korean couterparts, to choose between the competing size standards.

South Korea' s top-two panel makers are often pioneers in the market and benefit from higher product margins due to their market-leading roles. However, Taiwanese panel makers are very cost competitive when they begin big-volume production at standard sizes (for example, 32" and 37" panels), forcing their Korean counterparts to try to increase the mainstream size, until it now rests at 40" or larger.

Industry sources analyze that there is a sophisticated system of competition and cooperation in the global TFT-LCD panel line, but the game is often only played by major players.

Global New-Generation TFT-LCD Business Deployment
Company	Generation	Substrate Size (mm)	Planned Monthly Capacity (1, 000 units)	Date of Mass Produciton
S-LCD	7G	1, 870 x 2, 200	75	Already
Samsung	7G (Phase 1)	1, 870 x 2, 200	45	2006/01
	7G (Phase 2)	1, 870 x 2, 200	45	2006/08
	8G	2, 160 x 2, 460*	30	Under planning
LPL	6G	1, 500 x 1, 850	90	Already
	7.5G	1, 950 x 2, 250	90	2006/01
	8G	2, 200 x 2, 600*	--	--
Sharp	6G	1, 500 x 1, 800	45	Already
	8G	2, 160 x 2, 460	30	2006/07
AUO	6G	1, 500 x 1, 850	60	Already
	7G	1, 950 x 2, 250	30	2007
	8G	Might follow LPL's	--	--
CMO	5.5G	1, 300 x 1, 500	180	Already
	7.5G	1, 950 x 2, 250	30	2007
	8G	Might follow LPL's	--	--
CPT	6G	1, 500 x 1, 850	60	Already
	5.5G or 7.5G	--	--	--
Quanta	6G	1, 500 x 1, .850	60	Already

*: Temporarily decided.

Source: The companies