Chi Mei breaks ground on new LCD factory

Taiwanese LCD screen maker Chi Mei Optoelectronics has broken ground on a new factory that will produce screens measuring 40 inches or more, part of the trend toward bigger LCD TVs.

The new plant, which may use 7.5G (advanced seventh generation) LCD manufacturing technology, will be able to produce sheets of glass up to 1,950 by 2,250 millimeters, good for cutting 42- and 47-inch LCD screens.

"No time schedule has been set for the plant yet," said Loreta Chen, a company representative. The company has also not yet determined if the new plant will be a 7.5G factory or 8G, which would use even larger sheets of glass. Construction on the plant started earlier this month.

The new project should ensure that prices of LCD TVs continue to fall to levels more and more consumers are able to afford, since the screen is the most expensive part of an LCD TV. The new plants reduce production costs by increasing the volume of screens a company can cut from each sheet of glass.

In addition, the allure of the LCD TV market has caused cutthroat competition among LCD screen producers such as Chi Mei and Samsung Electronics Co. Ltd., causing them to increase production at a faster rate than consumers can snap up LCD TVs. The result has been a glut of LCD screens recently, which has caused prices of the screens to drop.

Chi Mei plans to spend NT$100 billion (US$3.09 billion) on plant construction and production line equipment this year, compared to NT$62 billion last year. The company's newest plant is being built in southern Taiwan at the Kaohsiung Science Park.

Earlier this year, Samsung and LG.Philips LCD Co. Ltd., two of the world's largest manufacturers of LCD panels, both started commercial production at brand new LCD factories. On Wednesday, S-LCD, the LCD panel manufacturing joint venture of Sony Corp. and Samsung, said it plans to invest a further 222 billion won (US$238 million) to expand production at its factory in Tangjeong, South Korea.

The IDG News Service is a Network World affiliate.