So it looks like TCL is going into the LCD panel business, confirming earlier reports about a partnership with the Shenzhen government to build a 8.5G plant for Rmb24.5 billion ($3.6 billion). The offspring will be christened Shenzhen Huaxing Optoelectronics Technology Co., Ltd. Yes, I know what you’re thinking: Just what the world needs – another LCD panel plant. … Didn’t anybody tell these folks the industry is dealing with some serious overcapacity?

I wrote about this nonsensical idea earlier this month in Shenzhen to subsidize 8.5G LCD panel plant. TCL said today that it will team up with Shenchao Technology Investment, a company run by the Shenzhen government, to develop the project in a 50-50 split. In retrospect, this makes perfect sense, because only through wasting Chinese taxpayer money does it seem viable to build another LCD plant. Seems they are the new (money-losing) capex fad in China, now that SMIC has rationalized the fab craze.

Construction will start in January and the first panels will roll of the line in Q3 2011. Capacity will be 100,000 panels a month, and 14 million LCD TV module assemblies annually, including arrays, color film, cells, and module production, focusing mainly on the manufacture of 26", 32", 46", and 55" LCD displays.

Originally, I’d heard this plant was a Rmb10 billion project, but turns out that’s just the ante. The two companies will each invest Rmb5 billion in the joint venture as registered capital, TCL said (it will finance its investment by selling 1.5 billion new shares in a private placement.) Later on, the remaining Rmb14.5 billion will be raised via bank loans and other methods, TCL said, but didn't elaborate. (We will, though -- they will beg the Shenzhen government for more money).

This isn’t the first leading-edge panel plant being proposed in China. There are at least six other 8G projects on the drawing board, including a LG project in Guangzhou, a Sharp project in Nanjing, and a Rmb22 billion Samsung-Suzhou government-backed project. Perennially profitless Beijing Orient is also in the 8G game, saying it (and the Beijing government) will spend Rmb28 billion (Orient, Rmb16bn; Beijing gov. Rmb12bn) to build a plant ready for production by 2011.

The goal? To be the world’s second largest base (after Korea) for advanced LCD fabs by 2012. The Chinese figure it makes sense, since they will be the largest market for LCD TVs by late next year or early 2011.

SHAMELESS PLUG/HONESTDISCLOSURE: I work for RedTech Advisors (China) Ltd., which offersresearch, investment and strategy services related to China'sConsumerTech, CleanTech and MedTech markets.  For more info, please seewww.redtechadvisors.com.