It’s Black Friday, again and I’m sitting down to write my editorial on a Friday, as I usually do. However, I’m not going to cover the event this year, as just as we were closing the issue, we got news from Korea that LG Display has finalised its decision to build a new plant in Paju, close to the North/South Korean border. The plant will have a “9th generation or above” substrate size, which suggests that the final decision on the exact size has not yet been decided. However, it looks from that comment as though it will be a little bit above 2600 x 2800mm and will be the biggest substrate size used in Korea. (When you look closely at the LG announcement, it has announced today that it will build a factory [$1.56 billion], although it hasn’t announced all the equipment investment which could take total investment to up to $8.7 billion in time. There’s time to change what gets made in the factory.)
While Sharp has had a G10 fab in Sakai for a while, and BOE is planning one in China. Samsung has been talking about a G10 for a long time – we have been reporting on rumours about a G10 fab for Samsung since 2007, with the latest rumours appearing in the Korean press this spring (Samsung Denies OLED Rumours, Considers G10) and summer (Samsung Beats BOE With G10.6). At the moment, both LG and Samsung have multiple fabs at G8 (2200 x 2500).
Larger substrate decisions are finely nuanced. As veterans will know, larger substrates offer potentially better productivity as output is higher per unit of capital investment – you invest a bit more than for a smaller generation, but get a lot more output. Balancing against that, if yield is not so good, some or all of that advantage may be lost. Being the first to a new generation has a big cost penalty, as equipment and material makers are always on a learning curve and costs may be high, but also has the potential for the biggest gains, especially for larger panels. (I remember going to a talk back in the ’90s in San Jose, where a speaker, from SEMI I think, showed how G5 or G6 could never be a good economic move, but I couldn’t find my report in my database)
Sharp got advantages from being the first to G6 and to G10, but those advantages didn’t last long. In the case of G6, others arrived quickly, while the G10 advantage reduced as other makers worked out how to make different sized panels from the same substrate, meaning that they could maintain the percentage of the glass sold even for large panel sizes. However, it is still the case that making a single size on a substrate is more economical, and as more G10 fabs get built, the equipment and material makers get more knowledge and experience. So the reasons against building a G10 gradually get weaker.
However, the decision by LG, compared to the lack of decision by Samsung, highlights a difference in the structure of the companies. Samsung Display is part of the Samsung Group, while LG Display, while having a big share from LG group (37.9%), is a separately listed company. Arguably, Samsung has a lot more choices of where to invest, whereas LG Display is just in the display business. It is several years since I asked Samsung Displays’ senior management in an interview “How can you persuade the finance department to give you more billions for another fab?”, given the slowing growth in TVs and the flattening of notebooks and monitor demand.
Bob
