China’s rising dominance in flat panel display manufacturing

Paul Cain, Strategy Director

July 08, 2019

The growth in flat panel display (FPD) production capacity in China has been quite astounding over the past decade. Back in 2009 there was very little FPD capacity in China; Korea, Taiwan and Japan made nearly all of the world’s displays, with nearly half coming from Korea. This year, China’s capacity has risen to more than 153 million square meters according to IHS, representing just under half of the worldwide capacity for display production.

Flexible displaysOf course, displays manufacturing is not the only industry that has seen colossal growth in China, but its relative technical complexity compared to many industries has meant that huge investments in capital equipment have been required, alongside the formation of high-skilled workforce for production and R&D of display technologies. 

Such a rapid growth in capacity has not happened by accident – it has been a concerted effort by the Chinese government, who identified display manufacturing as a key industry for both revenue growth and job creation, and to serve a rapidly growing internal market. As a result there have been significant subsidies available at a national, provincial and local city levels to cover capital equipment (often up to 50%), as well as other subsidies and tax breaks. Competition between different provinces and cities has resulted in clusters of fabs across China. Today over half of China’s provinces contain major display factories.

New Gen 10.5 factories

The capacity in China will continue to grow in the coming few years. The most recent wave of fabs are so-called Gen 10.5 factories – the biggest display factories ever built. These use huge sheets of glass (2.9m x 3.4m) which are processed in one sheet until they are cut down to TV-sized pieces at the end of the process. The input glass sheet size is so large that it cannot be shipped to the factory, so a dedicated glass foundry must be built immediately adjacent to the display factory. A single Gen 10.5 display fab can output more than 10 million square meters of display per year from a facility costing around $6-$7Bn to build and creating several thousand high skilled jobs.

As a result of the wave of Gen 10.5 lines, China’s largest displays maker, BOE, will this year become the largest display maker in the world by capacity, with 53 million square meters per year. Across all display makers in China there will be five Gen 10.5 factories be online by 2023, meaning China will possess 62% of worldwide capacity, covering a wide range of display types including conventional glass LCD and OLED displays, as well as flexible OLED and Organic LCD (OLCD) displays.

Competition among display makers

With all this capacity online there will be more pressure for display makers to differentiate their product offerings in terms of performance and application. We are already starting to see investments in the manufacture of new technologies such as flexible OLCDs, ultra-high contrast LCDs (Dual Cell LCDs) and wide colour gamut displays. As China gains lead in in display panel production, it will be interesting to see how it will influence the direction of this exciting and important industry.

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