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AUO Schedules Small Addition to Gen 6 LCD Fab
AUO will be adding a small amount of capacity to their Gen 6 line in Kunshan, China, which has been built out to 36,000 sheets/month, against a total potential capacity of 45,000 sheets/month. The increase, which will be put into production in the 3rd quarter of next year, will add 9,000 sheets/month to the fab’s capacity or 0.45%. While that is a small amount of additional capacity, that fab is producing IT products, essentially monitor and notebook panels, so 9,000 sheets/month on an annualized basis represents 108,000 additional sheets, and if. For example, that production was split between 27” monitors and 14” notebook panels, at current panel prices that annualized increase in panel sales would come to $138.7m, or a 1.4% increase in sales for a 0.45% increase in capacity, assuming 100% utilization.
Last month the AUO board approved capex of NT$455m (~$16m US) for “factory and capacity optimization and adjustments.” Company management did note that they expected the shortage of key components to worsen in 2Q, as compared to 4Q ’20 and 1Q ’21, citing glass substrates, PCBs, and polarizers more specifically, along with ‘persistent’ IC supply issues, with component and material lead times extending to roughly eight weeks from a pre-pandemic four weeks. In January TCL was considering a project that would entail the development of a new Gen 8.5 LCD fab in Guangzhou, China, with the potential for another fab dedicated to producing flexible and rollable OLED displays using printing technology. TCL has now signed an agreement with the Guangzhou Municipal People’s Government and the Guangzhou Development Zone, both state-owned organizations, to build a new Gen 8.5 LCD fab, owning a 55% stake, with the government’s stake at 45%.
The project, which is expected to cost 35b yuan ($5.35b US) is expected to begin construction in September of this year, although it is contingent on TCL raising 12b yuan ($1.83b US) in a private share sale to up to 35 investors, of which 9b yuan ($1.375b US) will be used for the new fab. According to the company, the new fab will take two years (from construction start) to begin production and will have a stated capacity of 180,000 sheets/month, which is in line with our original expectations, although the fab’s start date is a bit earlier than our expectations if they meet their stated goal. The backplane technology is expected to be IGZO and the fab is expected to be focused on producing IT oriented displays, such as monitors, notebooks, automotive displays and similar mid-sized panels.
AUO will be adding a small amount of capacity to their Gen 6 line in Kunshan, China, which has been built out to 36,000 sheets/month, against a total potential capacity of 45,000 sheets/month. The increase, which will be put into production in the 3rd quarter of next year, will add 9,000 sheets/month to the fab’s capacity or 0.45%. While that is a small amount of additional capacity, that fab is producing IT products, essentially monitor and notebook panels, so 9,000 sheets/month on an annualized basis represents 108,000 additional sheets, and if. For example, that production was split between 27” monitors and 14” notebook panels, at current panel prices that annualized increase in panel sales would come to $138.7m, or a 1.4% increase in sales for a 0.45% increase in capacity, assuming 100% utilization.
Last month the AUO board approved capex of NT$455m (~$16m US) for “factory and capacity optimization and adjustments.” Company management did note that they expected the shortage of key components to worsen in 2Q, as compared to 4Q ’20 and 1Q ’21, citing glass substrates, PCBs, and polarizers more specifically, along with ‘persistent’ IC supply issues, with component and material lead times extending to roughly eight weeks from a pre-pandemic four weeks. In January TCL was considering a project that would entail the development of a new Gen 8.5 LCD fab in Guangzhou, China, with the potential for another fab dedicated to producing flexible and rollable OLED displays using printing technology. TCL has now signed an agreement with the Guangzhou Municipal People’s Government and the Guangzhou Development Zone, both state-owned organizations, to build a new Gen 8.5 LCD fab, owning a 55% stake, with the government’s stake at 45%.
The project, which is expected to cost 35b yuan ($5.35b US) is expected to begin construction in September of this year, although it is contingent on TCL raising 12b yuan ($1.83b US) in a private share sale to up to 35 investors, of which 9b yuan ($1.375b US) will be used for the new fab. According to the company, the new fab will take two years (from construction start) to begin production and will have a stated capacity of 180,000 sheets/month, which is in line with our original expectations, although the fab’s start date is a bit earlier than our expectations if they meet their stated goal. The backplane technology is expected to be IGZO and the fab is expected to be focused on producing IT oriented displays, such as monitors, notebooks, automotive displays and similar mid-sized panels.
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