Corning plant spurs hopes for Chinese flat panel industry

Beijing and Shanghai are sparing no efforts in their battle to host the glass substrate finishing plant announced by Corning for China. The company announced 1 February 2006 that its board of director…

Beijing and Shanghai are sparing no efforts in their battle to host the glass substrate finishing plant announced by Corning for China. The company announced 1 February 2006 that its board of directors had approved funding to set up a backend glass substrate processing facility in China with the location of plant undecided. The move will make the supply chains of upstream panel materials more comprehensive in China and strengthen the competitivity of China“s panel-related industries. Beijing and Shanghai, where some LCD downstream production lines have been set up, are actively competing to host the new plant. Corning did not make public how much it would invest. The US firm, the world“s largest glass substrate supplier, is the first to decide to build a substrate plant in China. BOE Technology Group Co Ltd in Beijing, Shanghai SVA-NEC Liquid Crystal Display Co Ltd and Long-Teng Optronics in Kunshan are the major panel companies in China. BOE Technology Group and Shanghai SVA-NEC have already started mass production. Long-teng Optronics is setting up a plant. It is said that both BOE Technology Group and Shanghai SVA-NEC are trying to attract the Corning facility to the industrial districts where they have built their plants, so it is very likely that Corning might choose a location between Shanghai and Beijing. According to a panel maker, glass substrate acts as an indicator for the upstream material supply chains in the panel industry. Once glass substrate companies decide to build furnaces in a specific location, other material and component suppliers will gravitate to the same spot. As a sign of its determination to foster the panel industry, the Chinese government has included the industry in its “11 five-year development plans“. However, Corning“s decision to set up a substrate finishing plant rather than a production plant with glass melting furnaces may be an indication that it is still hesitant about China“s success in developing a panel industry. Of the four major glass substrate suppliers in the world, global leader Corning is from the USA while the other three are Japanese: Asahi Glass Company, Nippon Electric Glass and NH Technoglass. The supply of other materials, such as color filters, polarizers and lighting lamps, is also dominated by the Japanese. Because anti-Japanese sentiment remains strong in China, Japanese material companies generally have deep concerns about setting up plants there. Therefore, whether or not China will be able to set up a complete panel supply chain remains to be seen. At present, China is a long way behind South Korea and Taiwan in view of the clustering effect of upstream panel material supply chains. Completing the upstream supply chains will be one of the important factors for Chinese success in the development of the sector. On a more optimistic note, China is the main production base for desktop and notebook computers and the biggest market for televisions in the world. It also has fully grown downstream industries and markets. If China can consolidate the upstream and downstream industries locally, it may threaten the dominance of Taiwan and South Korea.