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TCL to increase LCD capacity

By Wang Zhuoqiong (China Daily)
Updated: 2009-09-03 07:57

TCL's domestic sales grew 12 percent in the first half of the year due to the government's stimulus moves. [China Daily]

Television and mobile phone maker TCL is setting up a new assembly line in Huizhou, Guangdong province as part of the cost cutting and technology measures it undertook to halt sliding overseas sales, said Li Dongsheng, chairman and CEO in an exclusive interview with China Daily.

The 800 million yuan assembly line is expected to start operations on Sept 16 and along with the 1.2-billion-yuan module facility set up last year in Huizhou, help the company make sizable inroads in the liquid crystal display (LCD) market, Li said.

The new manufacturing line will also be the country's first integrated production line, with a production capacity of 8 million display modules and 5 million TV units. Over the next few years, the company plans to increase the capacity to 10 million modules and 10 million TV units.

"The enhanced capacity will help fuel our global expansion plans," Li said.

TCL expects LCD production volume to exceed 7.5 million units this year compared with 4.2 million units last year, he said.

Related readings: TCL set to make profit in second half  TCL's overseas business drops 8%   Govt subsidies raise appliance sales; TCL pushes LCDs  TCL on board with China Mobile 3G

The company's overseas sales plunged nearly 26.44 percent in the first half of the year to 6.36 billion yuan and accounted for 37.28 percent of the total revenue.

The global economic slowdown has hit TCL badly with its original design manufacturer (ODM) business suffering, despite the sizable inroads made in overseas markets last year, said Li.

Part of the problems were compounded as the company's main markets in the US and Europe floundered due to the crisis.

"We started to feel the pressure from the third quarter of last year," Li said. "We are now learning to live with the realities like lower demand and reduced purchasing power."

In contrast with its overseas fortunes, TCL's domestic business grew 12 percent in the first half on the back of the government subsidies to boost purchase of appliances in rural areas.

The real challenge for the company, however, would be making its presence felt in the urban market, said Li, as the government policy encourages urban residents to change their old home appliances for new ones in the second half of the year.

TCL's decision to invest in upstream products will help it to compete with its rivals who have also been aggressively expanding production capacities, said Joyce Yang, flat panel display product manager of SEMI China, an industry association.

On Tuesday, TCL's rival BOE Technology set up a new LCD manufacturing facility in Beijing with a total investment of $4.1 billion to produce eighth-generation panels.

China has been relatively slow in adopting more advanced LCD technologies and most of the companies are still using fifth-generation technologies. The advanced eighth-generation plants can churn out LCD panels larger than 50 inches using bigger glass sheets.