Glass in China
As we have mentioned in the past, much is made in the Chinese trade press about the country’s ability to dominate the LCD display business over the last few years, and credit where credit is due, as Chinese display producers such as BOE (200725.CH), Chinastar (pvt), and HKC (0248.HK) have become dominant or major players in the LCD space, particularly in reference to large panel LCD display production. Much of this comes from the addition of new LCD capacity at the Gen 8.5 or Gen 10+ substrate sizes, with particular emphasis on Gen 10+ fabs.
One area that has been neglected by the Chinese display industry is glass substrates where much of the industry relies on a small number of display glass producers that are both well established and have a vast production knowledge-base. While China does have a few display quality glass substrate production lines there is only one that is able to produce substrate glass for Gen 8.5 panel production and none that are able to produce substrates for Gen 10+ fabs, most of which are on the Mainland. This leaves Chinese large panel producers to depend on Corning (GLW), Asahi (5201.JP), and NEG (5214.JP) for those substrate sizes, with some producers building glass production facilities for Gen 8.5 and Gen 10 on the production campuses of those fabs.
We have seen statistics as to how China is developing it substrate glass industry, soon to ‘dominate’ as the country has done with panel production, but in reality that bravado is a bit misconceived. We see Gen 10+ panel production capacity growing 31.5% this year, representing 21.8% of total industry capacity, which is up from 14.8% of the industry total last year, with growth below Gen 8.5 non-existent in the LCD space. As larger glass sizes tend to come at a premium, not only does Gen 8.5/Gen10+ glass represent the only capacity growth in the LCD space, but maintains higher margins than generic substrate glass sizes.
Much of this is the result of the technology used to produce substrate glass, which requires considerable production and formulation expertise that is not easily generated during the production of other glass types, and as Chinese OLED panel producers have learned, that technology expertise takes considerable time and expense to learn. All in, if Chinese glass ‘domination’ were near, we would expect Mainland producers to be in production at Gen 10+ sites across China, which it seems they are not and given the unusual stability of substrate glass prices over the last few years, competition is little changed.
One area that has been neglected by the Chinese display industry is glass substrates where much of the industry relies on a small number of display glass producers that are both well established and have a vast production knowledge-base. While China does have a few display quality glass substrate production lines there is only one that is able to produce substrate glass for Gen 8.5 panel production and none that are able to produce substrates for Gen 10+ fabs, most of which are on the Mainland. This leaves Chinese large panel producers to depend on Corning (GLW), Asahi (5201.JP), and NEG (5214.JP) for those substrate sizes, with some producers building glass production facilities for Gen 8.5 and Gen 10 on the production campuses of those fabs.
We have seen statistics as to how China is developing it substrate glass industry, soon to ‘dominate’ as the country has done with panel production, but in reality that bravado is a bit misconceived. We see Gen 10+ panel production capacity growing 31.5% this year, representing 21.8% of total industry capacity, which is up from 14.8% of the industry total last year, with growth below Gen 8.5 non-existent in the LCD space. As larger glass sizes tend to come at a premium, not only does Gen 8.5/Gen10+ glass represent the only capacity growth in the LCD space, but maintains higher margins than generic substrate glass sizes.
Much of this is the result of the technology used to produce substrate glass, which requires considerable production and formulation expertise that is not easily generated during the production of other glass types, and as Chinese OLED panel producers have learned, that technology expertise takes considerable time and expense to learn. All in, if Chinese glass ‘domination’ were near, we would expect Mainland producers to be in production at Gen 10+ sites across China, which it seems they are not and given the unusual stability of substrate glass prices over the last few years, competition is little changed.
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