India OLED MOU
Over the last year or two we have noted that the government of India has been trying to attract display producers to build LCD or OLED production fabs in the country by offering various financial and infrastructure incentives. While there are a considerable number of companies with high capacity assembly plants in the country, it has been harder to attract actual production fabs as they need a complex infrastructure of suppliers that feed the fab or the cost of transporting raw materials and components offsets much of the value of the incentives. On 06-25-21 and again on 12/16/21 we noted that the cost of building an assembly line in India was ~60% of that in China, which has gone a long way toward bringing in companies like Foxconn (2354.TT), Wistron (3231.TT), who assemble for Apple (AAPL), and Samsung (005930.KS), whose smartphone assembly plants in India have a capability to produce over 100m smartphones each year.
The chicken and egg issue of a supporting supplier infrastructure is a difficult one for India and one that takes time and money to build, and India is also trying to attract semiconductor companies to the country, so capital has to be carefully allocated, but in our 05/23/22 note we indicated that a subsidiary ((Elest (pvt)) of Rajesh Exports (RJEX.IN), a Bangalore based company that is, according to the company, the largest processor of gold globally and the world’s lowest cost gold jewelers producer, was shopping for a deal under which the company could get funding for the construction of a Gen 6 OLED fab. It seems that the company and the government of the State of Telangana in Southeast India have signed an MOU for what is expected to be a ~$3b OLED project, along with additional projects to produce lithium ion batteries and electric vehicles.
Our skepticism about the project was based on the lack of any expertise by the company in the display space, particularly relating to OLED, but the company has stated that the technology “…will come from some of the most advanced research centers around the world…” but did not give any specifics on who might be associated with the project, although one positive is the fact that Vendanta (VEDL), an Indian mining company owned by billionaire Anil Agarwal, purchase a controlling stake in display glass producer Avanstrate (pvt) from Carlyle Group (CG) last year with the intent to use the substrate producer as a platform to develop an LCD module factory in Nagpur.
We don’t doubt that India wants to become a player in the display production business and is willing to offer capital that would help to attract interested parties, but it is a difficult proposition that requires not only a supply chain, but a considerable amount of experienced display engineers, who would have to come from sources outside of the country. Attracting that kind of talent is expensive and has proven difficult in the past, but much will depend on what foreign resources Elest is able to tap into. It would likely be difficult to attract talent from South Korea or Taiwan, but China’s OLED display industry, while still young in itself, would likely be the place where Indian companies might find display companies willing to supply construction and operating management for a price. Whether this project ever gets off the ground remains to be seen, especially as the agreement is an MOU, but we give it time to see if it can develop into an actual production facility in the future.
The chicken and egg issue of a supporting supplier infrastructure is a difficult one for India and one that takes time and money to build, and India is also trying to attract semiconductor companies to the country, so capital has to be carefully allocated, but in our 05/23/22 note we indicated that a subsidiary ((Elest (pvt)) of Rajesh Exports (RJEX.IN), a Bangalore based company that is, according to the company, the largest processor of gold globally and the world’s lowest cost gold jewelers producer, was shopping for a deal under which the company could get funding for the construction of a Gen 6 OLED fab. It seems that the company and the government of the State of Telangana in Southeast India have signed an MOU for what is expected to be a ~$3b OLED project, along with additional projects to produce lithium ion batteries and electric vehicles.
Our skepticism about the project was based on the lack of any expertise by the company in the display space, particularly relating to OLED, but the company has stated that the technology “…will come from some of the most advanced research centers around the world…” but did not give any specifics on who might be associated with the project, although one positive is the fact that Vendanta (VEDL), an Indian mining company owned by billionaire Anil Agarwal, purchase a controlling stake in display glass producer Avanstrate (pvt) from Carlyle Group (CG) last year with the intent to use the substrate producer as a platform to develop an LCD module factory in Nagpur.
We don’t doubt that India wants to become a player in the display production business and is willing to offer capital that would help to attract interested parties, but it is a difficult proposition that requires not only a supply chain, but a considerable amount of experienced display engineers, who would have to come from sources outside of the country. Attracting that kind of talent is expensive and has proven difficult in the past, but much will depend on what foreign resources Elest is able to tap into. It would likely be difficult to attract talent from South Korea or Taiwan, but China’s OLED display industry, while still young in itself, would likely be the place where Indian companies might find display companies willing to supply construction and operating management for a price. Whether this project ever gets off the ground remains to be seen, especially as the agreement is an MOU, but we give it time to see if it can develop into an actual production facility in the future.
RSS Feed