Chimei Innolux Corp (奇美電子) aims to ramp up production at its new-generation plant in Kaohsiung County later this year in a move that would enable it to build a more cost-effective TV panel factory in China, the nation’s biggest LCD panel maker said yesterday.
Chimei has put on hold an application to build a Chinese factory until it can produce much larger numbers of TV panels at the 8.5-generation plant in Kaohsiung County.
It currently lags local rival AU Optronics Corp (友達光電) in terms of its Chinese capacity deployment after AU Optronics in mid-March submitted an application to build a 7.5G plant in Kunshan, Jiangsu Province, China.
Limited by Taiwanese government regulations, Chimei would only be allowed to construct a 7.5G plant, which is considered one of the most cost-effective TV panel technologies in China, once it has ramped up production at one of its more advanced factories in Taiwan, such as the 8.5G plant.
“We are still at the stage of writing the proposal,” Chimei chief executive Tuan Hsing-chien (段行建) said in response to a question about the company’s progress in adding capacity in China.
“It will be appropriate to file [the proposal] after we have boosted capacity,” Tuan said, adding that the capacity expansion at the firm’s most advanced factory would have a close link with what Chimei can do in China based on the government regulations.
The Kaohsiung County factory, which currently produces 7,000 units per month, would be able to churn out 27,000 units a month by the end of this year, with the monthly capacity projected to rise to 57,000 units in the third quarter of next year, Tuan said.
Chimei is competing for a license to manufacture TV panels in China in order to benefit from fast-growing demand for slim-screen TVs there and to gain exemption from tariffs on LCD TV panels.
The company said it plans to spend NT$100 billion (US$3.09 billion) this year to boost capacity in order to cope with recovering demand.
“Business in the third quarter will keep growing from a year ago, although people are worried about uncertainties such as [the movement of] the euro. Overall, we feel the industry looks healthy for the whole year,” said Wang Jyh-chau (王志超), general manager of Chimei’s Tainan operations.
Chimei expects to increase its PC and TV panel shipments to 150 million units this year, helped by synergy from its recent three-way merger, Tuan said, although the company did not disclose detailed numbers for comparison.
On March 18, Innolux Display Corp (群創光電) acquired Chi Mei Optoelectronics Corp (奇美電子) and TPO Display Co (統寶光電) to create the nation’s top LCD panel maker, which was named Chimei Innolux.
Separately, commenting on possible investment in Chengdu in China’s Sichuan Province, Tuan said: “It would have a positive impact on the company’s future development if we could get a chance to invest there.”
Tuan also said the company had sped up its pace in moving factories to China’s hinterland following a recent wave of wage hikes in its coastal provinces.
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