Displaybank, as reported by DigiTimes, has forecast that the LCD industry will go to Gen 10 Fabs in 2010 and Gen 12 fabs in 2012. Is this to be believed?

Matt Brennesholtz
Insight Media Analyst

At least one Gen 10 fab is a certainty at this point. Sharp has announced a Gen 10 fab for Sakai City, Osaka Prefecture. Construction is slated to start in November 2007, with production operations scheduled to start by March 2010. The fab will use 2,850 mm x 3,050 mm mother glass and will be able to make six-up 65" or eight-up 57" panels. A fab like this needs a huge amount of infrastructure support, but that is likely to be there as well. For example, Asahi Glass has announced it will invest 30 billion yen ($256 million) to boost its LCD glass capacity. This investment will include a furnace capable of processing 5 million square meters per year and a 10th generation back-end processing line in Hyogo prefecture.

But Gen 12? This fab would be capable of making six-up 86" panels or eight-up 72" panels on its 3,350 × 3,950 mm substrate. No one has announced a Gen 12 fab and Displaybank didn’t forecast what the price of a fab like this would be. If a Gen 10 fab is between $3.2 Billion and $4.25 Billion, Insight Media would expect a Gen 12 fab to be at least $4.9 Billion, and perhaps as much as $6.25 Billion.

An LCD Fab is most efficient when it runs large panels 6- or 8-up, which means, for Gen 12 fab, 86" and 72" panels. It can, of course, make smaller panels. For example, a Gen 12 Fab could probably make 42" panels 24-up, or perhaps 28-up. The average LCD TV

size is increasing steadily and by 2012 it will probably be at least 42", possibly larger. But 72" or 86"? Most people can’t fit them in their homes. And in the US, most wives won’t let their husbands have a TV that large, even if it would fit.

The economics of a Gen 12 fab don’t make much sense to me. The cost per unit area for an LCD panel declines steadily with increasing substrate size, through about Gen 7 or Gen 8. The main justification for a bigger Fab than Gen 8, besides bragging rights, is the ability to make large panels. The table, presented by Displaybank at Display Summit in China last spring, shows that there are enough Gen 6 through 10 fabs planned by a variety of panel makers to support the market in terms of total LCD area, even if they couldn’t make 86" panels efficiently.

I don’t believe the market for 86" or even 72" TVs in 2012 would be enough to support this fab. Will professional markets such as digital signage and data visualization be enough to justify the cost of the fab? I doubt it, but I am willing to take a wait-and-see attitude. That would be one cool factory and I would love to get a tour.

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