Competition in the liquid crystal display (LCD) industry is heating up with the nation's third fifth-generation plant expected to begin operating in the next few months.

The plant, Longteng Optoelectronics, will soon be completed and the first phase will be up and running before the end of 2005, according to an official from the Kunshan Economic & Technical Development Zone, where the plant is located. Kunshan is an hour from Shanghai.

Construction of the first phase began in January and was officially approved by the State Development and Reform Commission on June 8 with an initial investment of US$630 million, said the official, who declined to be named.

He said second and third phases are under consideration, but could not give a figure on the expected total investment.

He estimated that the plant will help to form a LCD production complex in the development zone and total investment in the sector within the zone may reach US$10 billion in three to five years, with an annual output value of 100 billion yuan (US$12.33 billion).

More than ten companies connected to the sector have said they want to invest in the zone, the official said, but did not name the companies.

Both the official and Longteng Optoelectronics itself refused to reveal the investors behind the company. But the official from the zone admitted one of the investors is from Taiwan.

Many reports have speculated that Taiwan's Pou Chen Corp is a major investor, but Pou Chen denied that. Taiwan companies are very low-key when making high-tech investments on the Chinese mainland.

Longteng is the largest fifth-generation TFT-LCD producer. The two others are a Shanghai-based joint venture between the SVA Group and Japan's NEC Corp, and the BOE OT, a subsidiary of BOE Group. Currently, fifth-generation production is the most advanced TFT-LCD technology on the mainland.

The Longteng project's first phase has a capacity of 90,000 substrates per month.

SVA-NEC said in March that the company's fifth-generation plant has a monthly capacity of 52,000 substrates and mostly produces 15-inch LCD monitor panels. It is also planning to construct six or seven new LCD production lines near Shanghai by 2008.

BOE OT announced in May its fifth-generation plant has started production, and the plant will reach a monthly capacity of 60,000 substrates in the second half of this year and 85,000 by 2006, up from 30,000 in May. The company plans to invest US$2 billion to add another fifth-generation LCD plant by 2007.

The Chinese mainland is predicted to be a key LCD supply centre. Each of the top-five TFT-LCD panel makers in Taiwan, except Chi Mei Optoelectronics (CMO), have set up LCD module (LCM) plants on the mainland to save production costs. CMO, Taiwan's No 2 maker of TFT-LCD panels, recently decided to set up a LCM plant in China, with details to be finalized early next month.

China's domestic market for LCDs is also prospering. CMO predicts demand in the Chinese mainland for LCD televisions will account for up to 15 percent of the world's total market by 2008. Currently, Chinese demand accounts for 3-4 percent of the world's market.

South Korea is the global leader in LCD manufacturing, with Samsung already producing seventh-generation LCDs.

(China Daily July 27, 2005)