In a recent Displaybank report, Innolux Display said they will set up a LCD plant in Vietnam and will build a sixth-generation LCD plant in Taiwan, according to company chairman and president Hsing C. Tuan. The overriding reason to locate a plant in Vietnam is cheap labor costs, which are approximately 40% lower than in China. This suggests that the factors that fueled dramatic panel growth in China may already be starting to abate there, as the Chinese standard of living continues to improve and Chinese workers demand higher wages.

Aldo Cugnini
Analyst

Sources say that Innolux is in talks with Foxconn Group about the final construction schedule. Innolux has also decided to go for 6G in its new plant in Taiwan, with mass production to begin from the first quarter of 2009. Innolux says that a 6G plant is very competitive because it is suitable for both 32-inch and 37-inch LCD TVs and 17-inch, 19-inch and 22-inch wide LCD monitors. The company will also proceed with in-house production of color filters at the 6G plant. With the total investment of $1.8B to $2.1B, initial capacity at the new plant to reach 80K to 90K units per month. The firm will first produce LCD monitor panels at its 6G plant with 30-inch class TV panel production to come on board later.

In October 2006, Tuan said the company might build a 7.5G LCD plant, but now, he said that the company has no need to build a 7.5G (or more advanced) LCD plant, according to the China’s Commercial Times. Tuan indicated that a 6G line is suitable for production of 20-inch and 22-inch wide panels for monitors and TVs, and is more compatible than later generation lines. Innolux is currently constructing a 4.5G and 5G plant with the monthly capacity of 45K and 80K units, respectively. The company is currently focusing on office applications (OA) as well as small to medium size applications.

Meanwhile, in Guangdong, China, Truly Semiconductors Ltd has begun manufacturing 2.5-generation TFT-LCD panels, according to ChinaTechNews.com. The report said the display products built there would be China’s first self-designed TFT LCDs. The production line will crank out 3.5-inch panels and smaller, and is capable of handling bulk orders. A Truly spokesperson has said that the line has been adopted for its own design, driving the expenses for mold making from $300K-$600K to just $140K. The company, which poured $300M into the plant, expects to reap an annual $500M in output value from the new line.

So as market conditions continue to drive out cost, we should continue to see migration of labor intensive display assembly into areas like Vietnam, and the further reaches of China; can Africa and Central and South America be far behind? Time will tell.

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