MIIT nervous about rush to build LCD panel factories
Looks like China is in the process of drafting some rules/guidelines to prevent redundant investment in LCD panel factories after a rush of announcements in the past few months, according to Xiao Hua, director of the Information Division at China’s Ministry of Industry and Information Technology (MIIT). Problem is, it may be a little late for that, given that at least $10 billion in projects have already been announced.
There are already five 8G panel lines and one 7.5G panel line on the drawing board in China. Insiders believe all six lines can meet domestic demand by 2013, which will be about 45 million LCD TVs, according to DisplaySearch.
Xiao said the new policy will focus on avoiding duplication and low-level construction (good luck with both of these); enhancing innovation and owning core technologies (a noble but challenging cause); promoting resource integration to form economies of scale (isn't this called M&A?); and strengthening cooperation with Taiwan and foreign countries (more JVs).
In TCL ignores LCD panel glut, vows to waste $3.6bn to make it worse, I wrote about the Shenzhen government subsidizing a 8.5G plant for Rmb24.5 billion ($3.6 billion) that will be built with TCL. Other governments are also getting in on the action, including Suzhou, Kunshan and Beijing.
This is what probably makes MIIT nervous, since this is the same thing that happened during the chip fab building craze five years ago. Lots of local governments competed with generous incentives to get a fab in their backyard, but they haven’t seen any payback. In fact, even senior officials in the Beijing Semiconductor Industry Association tell local mayors it’s not worth it (because for some foolish reason a few still want to build more fabs).
I’m curious to see what MIIT comes up with. Whatever it is, they better move fast, because the next fool's gold rush is on – and the local Chinese taxpayer is footing the bill.
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 see www.redtechadvisors.com.
There are already five 8G panel lines and one 7.5G panel line on the drawing board in China. Insiders believe all six lines can meet domestic demand by 2013, which will be about 45 million LCD TVs, according to DisplaySearch.
Xiao said the new policy will focus on avoiding duplication and low-level construction (good luck with both of these); enhancing innovation and owning core technologies (a noble but challenging cause); promoting resource integration to form economies of scale (isn't this called M&A?); and strengthening cooperation with Taiwan and foreign countries (more JVs).
In TCL ignores LCD panel glut, vows to waste $3.6bn to make it worse, I wrote about the Shenzhen government subsidizing a 8.5G plant for Rmb24.5 billion ($3.6 billion) that will be built with TCL. Other governments are also getting in on the action, including Suzhou, Kunshan and Beijing.
This is what probably makes MIIT nervous, since this is the same thing that happened during the chip fab building craze five years ago. Lots of local governments competed with generous incentives to get a fab in their backyard, but they haven’t seen any payback. In fact, even senior officials in the Beijing Semiconductor Industry Association tell local mayors it’s not worth it (because for some foolish reason a few still want to build more fabs).
I’m curious to see what MIIT comes up with. Whatever it is, they better move fast, because the next fool's gold rush is on – and the local Chinese taxpayer is footing the bill.
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 see www.redtechadvisors.com.
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