By Charles Annis – Vice President, Manufacturing Research, DisplaySearch

With Chinese TFT LCD capacity growing at a significantly higher rate than any other region, it was inevitable that glass substrate manufacturers would start building glass melting furnace facilities in Mainland China. China still only accounts for a small percentage of worldwide LCD capacity, but due to multiple new large glass fabs being planned for 2010-2012, capacity will increase at a compound annual growth rate of 85% from 2010 through 2013.

On July 21, Corning announced that it will spend $800 million to set up a new glass substrate facility in Beijing China that “will have up to Generation 8.5 glass-melting and finishing capabilities.” Construction will begin on the factory this fall and mass production is expected to start in the first half of 2012.

Although there are already multiple back-end glass finishing lines in China, the new Beijing factory will be the first large-scale mass production facility that includes the high-tech, high cost process of melting and forming non-alkali TFT array and color filter substrates. Currently all the LCD glass used by Chinese manufacturers is formed in Japan, Korea, Singapore or Taiwan and shipped to China. However, producing glass locally offers multiple benefits.

• As the Chinese LCD industry transitions from mainly Gen 5 manufacturing to Gen 8, shipping all those big, heavy glass substrates gets expensive. It becomes more efficient to make the substrates locally.
• Proximity of factory and customers enables strong support and good communication.
• The local government enjoys tax revenues and job creation from the large facility. The Corning press release states the factory will be built “with the support of the Beijing municipal government.” Presumably that includes some sort of incentives, potentially related to land leases, tax breaks, etc.

Up to now glass makers have hesitated to build furnaces in China because of the high cost of such facilities and uncertainty if all that planned array and color filter capacity would really be built. And there certainly still is plenty of uncertainty about which foreign LCD makers will build what fabs in China when. But with BOE’s and China Star’s Gen 8 lines now considered sure things, there is little risk that sufficient expected demand will fail to materialize. 

With glass supply only moderately larger than demand, glass capacity will be built continuously to keep up with growing LCD demand. The opportunity has now apparently grown beyond the potential risks. The Corning announcement is likely to be followed by more similar announcements by Corning or its competitors.