Published : 2010-03-29 17:20
Updated : 2010-03-29 17:20
Tension is growing at Korean liquid crystal display makers Samsung and LG Display as China is expected to soon pick companies to build their LCD plants on the mainland.
The high-stakes decision could reshape a growing competition among panel makers to grab a bigger share of the Chinese market, which is emerging as the world`s biggest for LCD TVs, industry officials said.
Industry officials say only one of the two Korean LCD suppliers may be able to win Beijing`s approval because of competition with Chinese and Taiwanese companies.
Six LCD manufacturers including Samsung and LG are known to have applied to construct their LCD factories in China, but Beijing is expected to choose only two or three LCD makers out of the six, industry officials say.
The six firms are Korea`s Samsung and LG, Taiwan`s AU Optronics and Chi Mei, Japan`s Sharp and China`s BOE. Two tickets may go to Chinese and Taiwanese LCD makers, while the remaining one may go to one of the Korean firms, industry officials say.
"Samsung and LG Display are on high alert ahead of Beijing`s decision," Park Han-jin, director of Beijing office of Korea Trade-Investment Promotion Agency, told The Korea Herald.
Chinese authorities are not expected to approve all of the applicants because of concerns about a potential oversupply in the industry, he said.
AU Optronics, the world`s No. 3 LCD maker, said on Monday that it has applied to set up a new LCD factory in Kunshan in China`s eastern province of Jiangsu, with investment of about $3 billion.
Speculation has it that amid thawing relations between China and Taiwan, Beijing is expected to give the green light to LCD factories eyed by one of the two Taiwanese companies. The chances are also high that China`s BOE may be able to gain the OK from Beijing for its LCD plant.
"When taking politics into consideration, China may pick a Taiwanese company. ... China also puts priority on its homegrown companies," Park said, adding that it is hard to predict which companies will be chosen.
LG Display CEO Kwon Young-soo said on Friday that he is positive about the prospect of winning an approval from Beijing, saying its panels using the so-called IPS (in-plane switching) technology are favored by Chinese TV makers.
A Samsung spokesperson yesterday refrained from commenting on the issue because of its sensitivity.
Samsung plans to build a 7.5 generation LCD manufacturing facility in Suzhou, Jiangsu province, for 2.6 trillion won.
LG Display has also signed a deal with the Chinese city of Guangzhou, Guangdong province, for a $4 billion, 8th-generation panel plant.
LCD makers which fail to receive the nod from Beijing could face higher duty costs as China is expected to hike their import tariffs from the current 3 percent to 6 percent.
"Those who fail to win approval are expected to suffer a blow," said JW Koo, an analyst at Kyobo Securities, saying China is expected to outpace the United States as the world`s top TV market.
Should Samsung fail to gain approval, the company is expected to speed up its plan to expand its eighth-generation LCD plant in Korea, analysts said. LG Display said on Friday that it will invest nearly 1.5 trillion won ($1.3 billion) in adding a new LCD production line at its eighth-generation LCD plant, a move which is expected to spur its close rival Samsung to follow suit in a looming capacity race, analysts said.
By Jin Hyun-joo