BOE Announces Investment in Gen 10.5 LCD Fab

As reported by DisplaySearch and ET News, BOE has announced plans to build the largest LCD plant in the world starting in 2016. The investment will be around CNY40 billion (roughly $7 billion) and take place in Hefei, Anhui Province. Mass production is planned for late 2017 or early 2018. This new LCD fab will surpass Sharp’s Gen 10 line, currently the only one of its kind in the world.

The BOE plant will use motherglass with a size of 3370 × 2940 mm compared to 3130 x 2880 mm sheets used by Sharp. The factory will have a capacity of 90,000 glass substrates per month and focus on the production on large panel production with UHD resolution.

According to the articles, the slight increase in sheet glass size allows the BOE factory to focus on 60″+ sizes, even though DisplaySearch hints at 43″ and 65″ as the focus of this factory.

One of the reasons for this aggressive move, is the shortfall of Chinese based display panel manufacturing in the larger sizes above 40″. With the average size of displays growing worldwide, including the Chinese market, demand for larger TV panels is expected to grow further.

Analyst Comment

One of the Chinese supply goals is to achieve independence of display supply for the Chinese market and manufacturing demand. This may be achieved by the installations of larger LCD Fabs such as the new BOE Gen 10.5 Fab.

One of the concerns is a potential oversupply situation in the TV panel market. This would come directly after several years of a very difficult situation for TV panel makers. In addition, Sharp has had no success with establishing itself as a supplier of large sized panels in the past. As my colleague, David Barnes, has recently pointed out (Sharp Decisions Needed), the company tried to use the panel supply mainly for its own brand – a strategy that did not work out too well for Sharp.

Once the 10.5 Gen BOE plant together with the just announced Gen 8.5 Fab go online, the supply of large TV panels will indeed increase rapidly. From the perspective of the consumer, this will lead to another price decline in large size TVs and consequently will push TV sales prices down. Since BOE is promoting the idea of UHD panels from this new plant, we may also expect a strong increase in the adoption of UHD TVs starting in 2018.

There is also the question what Sharp is going to do with its Gen 10 plant going forward. As David Barnes pointed out, nothing is for certain as of yet, but the BOE announcement may alter some of the strategic options for Sharp. – NH