Merck KGaA, the world's biggest supplier of liquid crystals, is slated to conduct the ground-breaking ceremony for its new plant in Taoyuan County today.
The Frankfurt-based company's NT$900 million (US$26.8 million) investment forms part of its plan to grab a bigger slice of the nation's thriving flat-screen sector.
It is the latest in a series of investments from foreign suppliers of equipment and components for flat-panel displays.
Earlier this month, flat-screen equipment maker Unaxis Holding AG announced plans to invest NT$1 billion to expand its local facilities.
Merck plans to set up an integrated manufacturing and R&D center for liquid crystals in Tao-yuan County. The center will also handle sales and marketing, said Thomas Lee (
"One of the major reasons for us to start a local production line is that Taiwanese makers are holding an edge to outpace South Korean companies in the [liquid crystal display] LCD panel area," Lee said.
Local manufacturers of LCD panels, led by AU Optronics Corp (
Merck is scheduled to start using the new facilities by the end of next year. By 2007, it hopes to fully supply liquid crystals to its local customers, which include AU Optronics and Chi Mei Optoelectronics Corp(
Merck has been importing these materials from its Japanese plants. Taiwanese flat-screen makers rely on Merck and Japan's Chisso Corp, Dainippon Inc and Chemicals Inc to supply liquid crystals.
Merck has no plan to build factories in China in the short term, Lee said. It will use the Taoyuan factories to supply Taiwanese panel-makers' Chinese operations, he added.
A 15-inch LCD panel for a computer monitor requires about 1g of the pricey liquid crystals, which currently cost US$5 to US$7 per gram for less advanced twisted-nematic panels, Lee said.
Backed by the growing demand for liquid crystals, Merck Display's sales could double to NT$13 billion this year over last year's figures, Lee said.
Merck's new investment is expected to strengthen its market position here, an analyst said. Itnow holds 69 percent of the global liquid-crystal market.
"I don't expect local flat-screen panel makers will save much, as Merck is unlikely to drastically cut prices after shifting manufacturing to Taiwan," said Roger Yu (
Liquid-crystal materials only make up 5 percent of a panel's cost, he added.
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