Amid Commoditization, China Ramps Up FPD Manufacturing Capacity as Others Scale Back

Chinese manufacturers are rapidly adding capacity in all flat-panel display segments, despite FPDs’ trend toward commoditization, said an IHS report Thursday. While the FPD market is seeing declining prices and shrinking margins, financial incentives from local Chinese governments are driving additional manufacturing capacity that's projected to grow by 40 percent per year between 2010, when China had 4 percent of the market, and 2018, when it's forecast to be a leading 35 percent of production, said IHS. “Despite growing concerns of oversupply for the next several years in most parts of the display industry, there is still little evidence that Chinese makers are reconsidering or scaling back their ambitious expansion plans,” said analyst Charles Annis. China currently produces only about a third of the FPD panels it consumes, but panel makers and government officials are expecting to double domestic production rates in the next few years while also looking to export markets, Annis said. BOE leads FPD producers at a 44 percent growth rate for the period and will become the main driver for Chinese share gains, he said. How excessive global supply, falling prices and lower profitability will affect these plans over time "is not yet exactly clear,” said Annis. Meanwhile, Japan, South Korea and Taiwan have restricted investments for FPD production to focus on advanced technologies, said IHS. Thin-film transistor capacity for FPD production in those countries is forecast to grow at less than 2 percent per year during the forecast period.