By Kim Yoo-chul
Samsung Electronics, the world's No. 1 supplier of liquid crystal display (LCD) panels, has decided to build its second LCD module plant in Suzhou, China to meet growing demand for flat-screen TVs in that country.
``The new plant will have an annual production capacity of some 2 million in the first phase. We expect the LCD module factory to start production in the first half of next year,'' a high-ranking Samsung Electronics source told The Korea Times, Sunday.
``Some $150 million will be invested for the construction of a new plant and Samsung will handle the investment by itself without bringing in a strategic partner,'' the source said.
LCD modules account for 70 percent of the production cost of an LCD television.
In April this year, Samsung cooperated with China's computer maker TCL in building an 8 million unit LCD module factory in Huizhou, Guangdong Province, in which Samsung only provides technology.
``There is a slim chance that Samsung would choose TCL for joint investment at this time. Skyworth and Konka are not on the list because they have finalized their partnership with LG Display,'' according to the source.
The Suwon-based technology giant had considered building another LCD plant for TV panels either in Guangzhou or Shenzhen. However, the plan was finally scrapped due to managerial reasons, Samsung sources said.
``South China has already attracted a couple of LCD panel giants such as LG Display and TCL. We had considered a possible managerial risk in the booming southern towns near Hong Kong.''
Samsung already has an LCD module plant in Suzhou ― southeastern China ― established in late 2002 with initial investment of $300 million. Samsung assembles panels for notebook computers and monitors, there.
``The expansion is necessary for Samsung at the current stage. Otherwise our rivals will catch up. Samsung is trying to grab a bigger market share in China,'' the source said.
Samsung executives say the outlook for the Chinese flat-screen TV industry is very attractive. But continued demand and supply imbalance for panels in TV use forced them to take a conservative initial step.
The South Korean company has steadily been reducing its LCD module output on its home-turf, while increasing production in China to improve efficiency by shifting labor-intensive work to that country.
Samsung has another LCD module factory in the northern city of Tianjin, near the capital Beijing. The source said Samsung is also seriously considering further investment in the plant.
According to the data from China's State Information Center released last week, Samsung Electronics, Sony and Sharp ranked as the top three sellers for the January to June period in the Chinese LCD TV sector with market shares of 12.25 percent, 12.13 percent and 10.45 percent, respectively.
In the first half of this year, the volume of LCD TV sales in China increased 40 percent year-on-year, with Samsung and its Japanese rivals taking up most of the growth.
Competition is getting fierce between foreign and Chinese LCD TV manufacturers for a bigger stake into the upstream LCD TV sector in China. On Sept. 4, the first Sino-foreign joint consumer electronics company Konka announced that it plans to invest RMB 886 million to build eight LCD module production lines in its factory with an annual capacity of 2.4 million.