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Laibao High-Tech to Construct Yet Another Gen 8.5 LCD Fab
Shenzhen based Laibao High-Tech has found the financing to build a $1.7b Gen 8.5 LCD fab in Wuhan. The new fab will have a capacity of 60,000 sheets/month, expandable to 80,000 for an additional ~$225m if the company decides to expand in the future. The fab will focus on notebooks, medical, industrial and public information displays. The fab will be built with the help of the local Wuhan government, which we expect will be financing much of the project. Laibao produces ITO coated glass, capacitive touch screens, and generated $42m in Net Income on $720m in sales last year and $47m in net profit on $691m in sales in the first three quarters of this year.
While new LCD fab construction has reached a hiatus as ASPs dropped, now that they are rising again, Chinese local governments that missed the initial growth spurt are looking to get into the “game”. While the Chinese government might be casting a more careful eye on building out LCD capacity than perhaps two or three years ago, the concept of building an LCD fab that employs hundreds of local residents is still an attractive one, especially to local or provincial government officials that see it as a path to a higher government calling. Many are no longer around when the fab has been running for a year or so, and are not involved in justifying the ongoing operation, but that does not stop the fab from being financed and built, regardless of the macro circumstances.
Shenzhen based Laibao High-Tech has found the financing to build a $1.7b Gen 8.5 LCD fab in Wuhan. The new fab will have a capacity of 60,000 sheets/month, expandable to 80,000 for an additional ~$225m if the company decides to expand in the future. The fab will focus on notebooks, medical, industrial and public information displays. The fab will be built with the help of the local Wuhan government, which we expect will be financing much of the project. Laibao produces ITO coated glass, capacitive touch screens, and generated $42m in Net Income on $720m in sales last year and $47m in net profit on $691m in sales in the first three quarters of this year.
While new LCD fab construction has reached a hiatus as ASPs dropped, now that they are rising again, Chinese local governments that missed the initial growth spurt are looking to get into the “game”. While the Chinese government might be casting a more careful eye on building out LCD capacity than perhaps two or three years ago, the concept of building an LCD fab that employs hundreds of local residents is still an attractive one, especially to local or provincial government officials that see it as a path to a higher government calling. Many are no longer around when the fab has been running for a year or so, and are not involved in justifying the ongoing operation, but that does not stop the fab from being financed and built, regardless of the macro circumstances.
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Barry Young
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