Production Expansion in China
“I know that there are some concerns about oversupply, but local production is absolutely necessary to overcome tariff barriers,” said Samsung Display CEO Kim Ki-nam at a meeting with reporters prior to the opening ceremony of its first LCD plant in Suzhou, Jiangsu, China on October 25. He added, “We will keep up with demands with local production.” He pointed out, “Local production brings about huge tax breaks.”
Despite worries about oversupply and technology leakage, Samsung’s first large LCD plant in China began its operations. It is due to the fact that China’s stance on protectionism is getting tougher over time. In fact, Beijing raised its tariff on imported LCD panels bigger than 34 inches from 3% to 5% in April. The Chinese government is planning to increase it again to 8% at the end of this year or early next year.
The construction of the facility in Suzhou was completed, after a year and five months, on 173,000 pyeong of land. With the 8th generation LCD display line (2,200×2,500mm), the plant is an LCD Cluster with forward and backward industries connecting materials, parts, production, and logistics in Suzhou Industrial Park.
There are cutting-edge companies and research labs in the field of IT, biotechnology, and nanotechnology in the China-Singapore Suzhou Industrial Park, where Samsung Display has been operating its LCD module plant since 2003.
CEO Kim commented, “China represents 20% of the global TV market. So I think that there will be enough local demand to match increasing supply. We can boost production, depending on the situation.” Samsung is planning to increase output from 17,000 units a month to 55,000 units in April, or up to 75,000 units based on market demand.
He said, “We will mainly produce ultra high-definition and full high-definition 48-inch and 55-inch panels, and try to lead the Chinese premium TV market.”
Kim went on to say, “Some people raised the possibility that the facility in Tangjeong could be vacant due to overseas expansion. So, I'd like to make it clear. There will be no overlap between the LCD plant in Tangjeong and Suzhou. Approximately 10% of the total 8 generation production will be manufactured in Suzhou.”
He concluded by saying, “The production of our flexible OLED displays has just started. We will differentiate our products by considering factors related to functions such as hard-to-be-flexible batteries.”