Tuesday, April 27, 2004
NEC's China LCD venture raises capacity by a fifth
Reuters Shanghai, April 27
A Chinese LCD maker backed by Japan's NEC Corp has raised its planned production capacity by a fifth, as factories across Asia gear up to meet booming demand for flat screens.
China's SVA said its $1.1-billion joint venture with NEC, one of just two liquid crystal display (LCD) monitor makers in the country, would begin production in small batches by October and gradually ramp up to full capacity by the middle of 2005.
It has increased its planned maximum output to as much as 54,000 units a month, versus an original 45,000, a senior executive told Reuters late on Monday.
"We have several advantages" over producers in other countries, said Xu Deliang, manager of strategy and development at one of SVA's listed arm, SVA Electron Co Ltd.
"There's a large market here in China for these monitors. Other markets also have higher labour costs, so we can make them more cheaply in China," he said in an interview at SVA Electron's Shanghai headquarters.
Analysts expect LCD television sales to double this year to about eight million to 10 million units from four million last year, as new production comes on-stream and prices fall.
LG.Philips LCD, the world's largest LCD maker, said in March it would invest about $22 billion in the product over the next 10 years. Rival Samsung Electronics Co Ltd plans to spend about $17 billion on LCDs over the same period.
Xu said the SVA venture was able to expand its planned capacity without the need for extra funds because costs turned out to be lower than expected.
FOCUS ON MONITORS
SVA and BOE Technology Group Co Ltd are the only two Chinese firms making LCD monitors, which have been in short supply in recent months as demand for thin computer screens grows.
On Tuesday, BOE said it will produce about 60,000 LCD displays a month, theoretically giving China a combined monthly capacity of more than 110,000 units. SVA and BOE are vying to establish themselves in a fast-growing industry dominated by the Korean companies and Taiwan firms such as AU Optronics. In February, BOE said it planned to float its display unit overseas to bankroll a $1.2 billion LCD plant in Beijing.
Both Chinese companies will initially focus on LCD monitors, but could upgrade their ventures to produce bigger panels used in LCD televisions.
SVA also has a $100-million joint venture with Japan's Matsushita Corp that is China's only maker of plasma displays used in larger thin-screen TVs.
Xu said the plasma venture raised annual capacity recently to 240,000 units from 50,000, and is now cranking out about 20,000 a month.
Plasma TV prices have slid about 10 per cent over the past year, with a 42-inch model now averaging about 21,000 yuan ($2,537) in China, he added.
"It hasn't had a big effect on our profits because raw material prices are coming down as panel prices come down," he said.
Global demand for plasma TVs should grow from about two million units this year to five to six million units by 2005, he added.
© Hindustan Times Ltd. 2004.