Thu, Jul 21, 2005 page10

• New 3M plant can help cut LCD costs

  KEY COMPONENT The US manufacturer is ready to start mass production of brightness-enhancement film in Tainan, which could bring about sizeable savings for local factories

  • By Jessie Ho / STAFF REPORTER
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  Diversified US manufacturer 3M Co announced yesterday that its new brightness-enhancement film (BEF) plant in Tainan will enter volume production tomorrow, which is expected to help reduce costs for nearby manufacturers of backlight modules and flat panels.

  BEF is a key component of liquid-crystal displays (LCDs) that increases the screens' brightness by improving the quality of light produced by the backlight module. 3M leads the sector with a market share of more than 80 percent.

  "We are glad that the investment will help our local partners to further develop the flat-panel industry," Seah Long-seng (佘隆生), managing director of 3M Taiwan Ltd, told a press conference in Taipei yesterday.

  The new plant, 3M Taiwan Optronics Corp, is located at the Southern Taiwan Science Park (南部科學園區) in Tainan. It is used to produce BEFs, dual BEFs, diffused reflective polarizer films and enhanced specular reflectors for various sizes of flat panels, including those used in LCD TVs and small handset displays.

  For the first year of operation, the plant is expected to churn out 90,000m2 of film every month. The figure will increase to 200,000m2 per month next year, and 280,0002 per month in 2007.

  3M plans to build another 200-ping factory next to the existing plant in 2007.

  The two plants, along with personnel, equipment, research and development expenses, will cost the company about NT$1.2 billion (US$37.6 million), said Charles Chang (張師誠), group manager of 3M Taiwan's optical markets.

  Currently the new plant has 70 employees. 3M plans to hire 125 more by the end of the year, and another 370 by the end of next year, Chang said.

  Setting up a BEF plant in the science park, which has a high concentration of LCD-related firms, has many advantages for 3M, such as the ability to deliver supplies to its local customers within 10 to 15 minutes, and to quickly adapt product consignments to customers' changing needs, Chang said.

  The plant's proximity to its clients will also help reduce costs, which will enable 3M to cut prices as its capacity improves, Chang said. He refused to discuss the possible range of such price adjustments.

  In addition to supplying local customers, Chang said, the company plans to meet surging demand in South Korea, Japan and China.

  As most manufacturers of backlight modules have migrated to China, the factory in Tainan will focus on high-end products as well as research and development to create more value, he added.

  Chen Chih-hao (陳志豪), an analyst at Capital Securities Corp (群益證券), said that 3M's investment can help develop the LCD supply chain in Taiwan, and benefit local major flat-panel makers such as AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子) with reduced costs.

  BEFs account for about 8 percent of the cost of making a LCD computer monitor, and about 7.5 percent of the cost of a LCD TV, which means that cheaper BEFs will have a considerable impact on panel prices, Chen said.

  Meanwhile, 3M can also look forward to the peak Christmas season ahead. Shipments of LCD panels in the fourth quarter are expected to jump by about 50 percent from the same period last year, according to Capital Securities' estimate.
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