The article below is from April 25 in Asian Revie
Post# of 22456
(Total Views: 340)
Posted On: 07/13/2017 10:51:42 PM
The article below is from April 25 in Asian Review. It ties in with the recent post about how LCD 'Fabs' are being planned and built in China, and will make China the world's largest LCD producer. The article says Japanese companies have to build their own Fabs in China to compete -
Japan's LCD materials makers bite the bullet on China production
Despite sagging profits, companies invest to get closer to rising clients
April 25, 2017 4:30 pm JST
HIROMI SATO, Nikkei staff writer
A demand for LCD televisions is boosting in China. © Reuters
TOKYO -- Japanese suppliers of liquid crystal display materials are planning a string of investments in Chinese production this year, looking to tighten their ties with rapidly growing clients in the country.
JSR is to open a plant for color resists, while Sumitomo Chemical is poised to begin production of polarizing films.
The companies are making these bets despite the sagging profitability of their LCD materials businesses.
JSR's color resist
"As we start up our first plant in China, we hope to increase our share of the market through production close to our customers," JSR Director Takao Shimizu told a news conference on Monday, held to announce the company's earnings for the year through March. JSR's new plant in Changshu, Jiangsu Province, is scheduled to come onstream later this year.
The plant, a joint venture with Taiwan's Chang Chun PetroChemical, will produce the materials that generate colors in LCD panels. JSR is seeking to supply these color resists to major Chinese panel makers such as BOE Technology Group.
Sumitomo Chemical, meanwhile, will set up its new production line for polarizing films in Wuxi, Jiangsu Province, in a joint venture with Dongxu Optoelectronic Technology of China. Output is slated to begin in the second half of fiscal 2017.
Nitto Denko, another Japanese maker of polarizing films, and Asahi Glass, which produces LCD glass, also plan to start production in China in 2018 or 2019. Their plants will be located in Shenzhen, in the province of Guangdong.
Mature tech
Generally, LCD materials are more profitable than petrochemical products. Japanese producers, however, are struggling to boost the profitability of their operations.
JSR's display materials business saw its sales value fall 8.6% to 56.8 billion yen ($517 million) for the year ended March. This might have been a factor in the company's second straight decline in annual operating profit.
The LCD materials businesses of Sumitomo Chemical, Nitto Denko and Asahi Glass face similar predicaments. Despite growing sale volumes, the materials are not bringing in enough money due to falling prices.
Most of the technologies involved in LCD manufacturing are already mature. Unlike in semiconductor production, companies cannot count on steady technological progress leading to periodic rises in LCD materials prices, according to JSR.
The profits of Japan's LCD materials suppliers peaked in the period from 2005 to 2010.
"Not exactly efficient"
"Honestly, investing to build a new plant in China is not exactly efficient," conceded a senior executive at one Japanese LCD materials maker.
Nevertheless, JSR will spend 4 billion yen to start production there, while Nitto Denko will shell out 13 billion yen. Sumitomo Chemical's investment in China will be close to 5 billion yen, while Asahi Glass seems to be planning to pour around 7 billion yen into its facilities in China.
These companies are investing in China despite not-so-bright profit prospects for a simple reason: Chinese LCD manufacturers are growing at a dizzying speed.
China is projected to overtake South Korea as the world's largest supplier of LCD panels for TVs in 2018 or 2019. Leading producers like BOE and China Star Optoelectronics Technology have announced plans to ramp up production.
With China emerging as the world's LCD production center, Sumitomo Chemical Executive Vice President Toshihisa Deguchi summed up the reality: "We have no choice but to start local production to supply Chinese makers if we want to remain in the business."
Chinese panel manufacturers' plans to invest heavily in next-generation products do offer a ray of hope. The companies have announced aggressive spending on panels formed by a thin layer of organic light-emitting diodes -- OLED displays. Smartphones are the prime target.
This shift could create new opportunities for materials makers to supply more profitable products.
Japan's LCD materials makers bite the bullet on China production
Despite sagging profits, companies invest to get closer to rising clients
April 25, 2017 4:30 pm JST
HIROMI SATO, Nikkei staff writer
A demand for LCD televisions is boosting in China. © Reuters
TOKYO -- Japanese suppliers of liquid crystal display materials are planning a string of investments in Chinese production this year, looking to tighten their ties with rapidly growing clients in the country.
JSR is to open a plant for color resists, while Sumitomo Chemical is poised to begin production of polarizing films.
The companies are making these bets despite the sagging profitability of their LCD materials businesses.
JSR's color resist
"As we start up our first plant in China, we hope to increase our share of the market through production close to our customers," JSR Director Takao Shimizu told a news conference on Monday, held to announce the company's earnings for the year through March. JSR's new plant in Changshu, Jiangsu Province, is scheduled to come onstream later this year.
The plant, a joint venture with Taiwan's Chang Chun PetroChemical, will produce the materials that generate colors in LCD panels. JSR is seeking to supply these color resists to major Chinese panel makers such as BOE Technology Group.
Sumitomo Chemical, meanwhile, will set up its new production line for polarizing films in Wuxi, Jiangsu Province, in a joint venture with Dongxu Optoelectronic Technology of China. Output is slated to begin in the second half of fiscal 2017.
Nitto Denko, another Japanese maker of polarizing films, and Asahi Glass, which produces LCD glass, also plan to start production in China in 2018 or 2019. Their plants will be located in Shenzhen, in the province of Guangdong.
Mature tech
Generally, LCD materials are more profitable than petrochemical products. Japanese producers, however, are struggling to boost the profitability of their operations.
JSR's display materials business saw its sales value fall 8.6% to 56.8 billion yen ($517 million) for the year ended March. This might have been a factor in the company's second straight decline in annual operating profit.
The LCD materials businesses of Sumitomo Chemical, Nitto Denko and Asahi Glass face similar predicaments. Despite growing sale volumes, the materials are not bringing in enough money due to falling prices.
Most of the technologies involved in LCD manufacturing are already mature. Unlike in semiconductor production, companies cannot count on steady technological progress leading to periodic rises in LCD materials prices, according to JSR.
The profits of Japan's LCD materials suppliers peaked in the period from 2005 to 2010.
"Not exactly efficient"
"Honestly, investing to build a new plant in China is not exactly efficient," conceded a senior executive at one Japanese LCD materials maker.
Nevertheless, JSR will spend 4 billion yen to start production there, while Nitto Denko will shell out 13 billion yen. Sumitomo Chemical's investment in China will be close to 5 billion yen, while Asahi Glass seems to be planning to pour around 7 billion yen into its facilities in China.
These companies are investing in China despite not-so-bright profit prospects for a simple reason: Chinese LCD manufacturers are growing at a dizzying speed.
China is projected to overtake South Korea as the world's largest supplier of LCD panels for TVs in 2018 or 2019. Leading producers like BOE and China Star Optoelectronics Technology have announced plans to ramp up production.
With China emerging as the world's LCD production center, Sumitomo Chemical Executive Vice President Toshihisa Deguchi summed up the reality: "We have no choice but to start local production to supply Chinese makers if we want to remain in the business."
Chinese panel manufacturers' plans to invest heavily in next-generation products do offer a ray of hope. The companies have announced aggressive spending on panels formed by a thin layer of organic light-emitting diodes -- OLED displays. Smartphones are the prime target.
This shift could create new opportunities for materials makers to supply more profitable products.
(3)
(0)Quantum Materials Corp. (QTMM) Stock Research Links
Scroll down for more posts ▼