China's LCD Makers Race On Rivals in Taiwan, Korea Hold an Edge in Costs, Technology
By YUN-HEE KIM Wall Street Journal May 9, 2006 http://online.wsj.com/article/SB114711963022146934.html?mod=technology_main_whats_news HONG KONG -- China's makers of liquid-crystal-display panels are swiftly picking up speed, but they need to reduce their costs and improve their technology to pose a serious threat to their South Korean and Taiwanese rivals, analysts say. China's two main LCD makers, SVA-NEC and BOE-Hydis, mainly produce 15-inch and 17-inch (38-centimeter and 43-centimeter) LCD panels used in computer monitors -- market segments that analysts expect to face intense competition and severe price pressure in coming years. By contrast, LCD manufacturers in Japan, Korea and Taiwan are investing heavily in more technologically advanced plants to make bigger panels used in televisions, where they hope to enjoy better demand as customers shift to flat screens from bulky tube-based sets. Companies like Samsung Electronics Co. and LG.Philips LCD Co. are ramping up production of panels of 40 inches and larger to meet that expected demand. SVA-NEC is a joint venture between Shanghai-based SVA (Group) Co. and NEC Corp. of Japan. NEC owns 25% and SVA has 75%. BOE-Hydis was formed after BOE Technology Group Co. bought the thin-film transistor liquid-crystal-display operations of Hynix Semiconductor Inc. of South Korea in 2003. The Chinese government's willingness to give tax breaks to domestic LCD makers should help spur growth in coming years, analysts say. Even so, the companies will need to lower their production costs -- driven up because they rely largely on expensive imported components -- and improve their technological capabilities. "Chinese LCD makers are behind the curve as they are two generations behind Korea and Taiwan in terms of technology," says Jeffrey Su, an analyst at Merrill Lynch in Taiwan. "In terms of product mix, Chinese companies are confined to the monitor market still, while applications are moving toward TV." "As SVA-NEC and BOE-Hydis are new to the industry, their cost structures are not as competitive as those of first-tiers," says Henry Wang, chief executive of Taiwan-based market research firm WitsView. "SVA-NEC and BOE-Hydis may find themselves in the same boat with other panel makers facing price competition in the monitor segment." The price of monitor panels has fallen sharply in recent months amid weak demand and growing supply. The price of the mainstream 17-inch monitor panel fell to US$115 in early May from $137 in early March, according to data from WitsView. Chinese manufacturers import many of the key materials used to make an LCD panel, such as glass, color filters, driver-integrated circuits and backlight components, says David Hsieh, an analyst at U.S. market research firm DisplaySearch. "Logistically and cost wise, it's not so competitive to import these materials," he says. A spokesman at BOE-Hydis says the company is making progress in LCD TV-panel production. While the bulk of BOE-Hydis's production is focused on the monitor segment, the company produces 20.1-inch LCD TV panels and has plans to begin 26-inch LCD TV-panel production in the second half. It also has plans to build a next-generation facility, said the spokesman, without providing further details. An official at SVA-NEC couldn't immediately be reached for comment. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list medianews@twiar.org To unsubscribe send an email to: [EMAIL PROTECTED]
