BOE to Expand Gen 10.5 LCD Fab
China’s largest LCD panel producer BOE (200725.CH) has officially announced its intent to expand the capacity of its Gen 10.5 LCD fab in Wuhan. The $3.77b US project will add an additional 25,000 sheets/month to the fabs current 90,000 sheet/month stated capacity. The project will be funded by existing BOE shareholders, who in this case are government funded partnerships and local city level development organizations.
The additional capacity, in our view, was not unexpected although our original expectations, when the initial construction project was funded, was for the phase 2 project to begin production in 1H of this year. Delays due to COVID-19 and panel price declines seen early last year have pushed the phase 2 project back a year to 18 months. This is a positive for Corning (GLW), whose co-located Gen 10.5 glass plant is the primary source of substrate material for the fab, with much of the Corning capacity being funded under similar circumstances to BOE’s funding sources. While we push out our BOE model a bit, the additional capacity will keep BOE ahead of local rival Chinastar (pvt), who has been building out its Gen 10.5 LCD capacity.
The additional capacity, in our view, was not unexpected although our original expectations, when the initial construction project was funded, was for the phase 2 project to begin production in 1H of this year. Delays due to COVID-19 and panel price declines seen early last year have pushed the phase 2 project back a year to 18 months. This is a positive for Corning (GLW), whose co-located Gen 10.5 glass plant is the primary source of substrate material for the fab, with much of the Corning capacity being funded under similar circumstances to BOE’s funding sources. While we push out our BOE model a bit, the additional capacity will keep BOE ahead of local rival Chinastar (pvt), who has been building out its Gen 10.5 LCD capacity.
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