Irico: CNY 2 billion investment in TFT substrate capacity

Irico Group Electronics, a Chinese state-owned television maker, said it would invest CNY 2 billion (HKD 2.27 billion) early in 2009 to add three more lines making thin-film-transistor (TFT) glass sub…

Irico Group Electronics, a Chinese state-owned television maker, said it would invest CNY 2 billion (HKD 2.27 billion) early in 2009 to add three more lines making thin-film-transistor (TFT) glass substrate for LCD panels. The Xian, Shaanxi-based company produced the first piece of mainland-made TFT glass substrate in September 2008, with the aim of winning market share from five global manufacturers including Corning of the United States, Asahi Glass and Nippon Sheet Glass of Japan. “After the first-phase production line of TFT glass substrate commenced production last month, we have received very positive feedback from bankers for the proposal of our second-phase expansion”, said Guo Mengquan, deputy general manager of Irico Group Corp, the company“s parent. “With internal resources and bank borrowings, we are seeking a partner to set up three more production lines”. In August 2007, the Hong Kong-listed firm bought a 69.53% stake in Shaanxi Irico Electronics Glass from parent Irico Group for CNY 279.6 million. Before the deal, Irico Group had spent CNY 800 million to build Irico Glass“ first production line, which has an annual capacity of 750,000 square meters of glass. Mr Guo said the first production line would generate about CNY 300 million in revenue in 2009. “The yield rate of our first production line is expected to grow to about 60% by the end of this year and will further grow to 80% next year”, said Mr Guo. “Our total capacity will be about 2.25 million square metres of glass after the second phase is completed”. A few years ago, Beijing began helping local manufacturers produce LCD panels, aiming to take market share from South Korean and Taiwanese companies. Shanghai-based SVA Group started making LCD panels in 2004, while BOE Technology Group in Beijing and Infovision Optoelectronics in Kunshan, Jiangsu province started in 2005 and 2006 respectively. In October 2008, Irico Group said it would jointly invest CNY 10 billion with a city government in Jiangsu province to produce LCD panels. However, all mainland LCD panel makers have to import TFT glass substrates as there is no local supplier. “Local LCD panel makers will be our main customers”, said Li Jishen, a deputy general manager in Shaanxi Irico Electronics Glass. “We will sell our product at a discount to the global market price, which is about CNY 750 per piece of glass”. Irico Group Electronics recorded 42% growth in sales to CNY 2 billion in the 1H 2008 from a year earlier while net profit jumped 123% to CNY 39.5 million.