Chinastar Updates T9 Progress
The CEO of Chinastar (pvt), China’s 2nd largest panel producer, gave a few hints as to the progress being made on the company’s T9 LCD display fab. At a conference he stated that the project, which is slated for a capacity of 180k sheets/month in two phases, at a cost of ~5.2b US. There have been rumors that the project, which is situated in Guangzhou, would be expanded to 250k sheets/month for an additional $1.63b US, but little has been said about such plans recently, and no mention was made at the recent conference. What was mentioned was that while the fab is in mass production mode, and was the fastest fab construction ever in terms of capping, move-in, fab start-up, and mass production (according to the company), the fab is currently ‘capacity climbing’ toward a goal of 95% yield by the end of the year.
What makes this significant is that according to the CEO, when that target is reached, phase 2 construction will begin, with our estimate of early 2024 for phase 2 fanfare, and mass production at acceptable yields (85% or greater) by year end 2025. All of this in light of how the LCD large panel space develops over the next 6 months, as there is currently little need for additional LCD capacity. In China, there is a different mindset that tends to be company centric, and Chinastar, and parent TCL (000100.CH) seem bent on expanding despite the lack of current demand. While boasting about early completion of such projects is gratifying for the company, it leaves a bit less room for slowing the progress of additional construction, which also delays the start of depreciation on a low producing fab and preserves at least some profitability, although these seem existential matters when you have a few billion dollars on the line, at least until its time to meet those utilization deadlines.
What makes this significant is that according to the CEO, when that target is reached, phase 2 construction will begin, with our estimate of early 2024 for phase 2 fanfare, and mass production at acceptable yields (85% or greater) by year end 2025. All of this in light of how the LCD large panel space develops over the next 6 months, as there is currently little need for additional LCD capacity. In China, there is a different mindset that tends to be company centric, and Chinastar, and parent TCL (000100.CH) seem bent on expanding despite the lack of current demand. While boasting about early completion of such projects is gratifying for the company, it leaves a bit less room for slowing the progress of additional construction, which also delays the start of depreciation on a low producing fab and preserves at least some profitability, although these seem existential matters when you have a few billion dollars on the line, at least until its time to meet those utilization deadlines.
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