Demand for upstream panel components is increasing in China and local makers are unable to meet supply, particularly for TFT polarizers. The China government, as a result, is issuing new subsidies to local makers to expand production and increase the self-sufficiency rate in China.
China's central government is now centralizing efforts to foster development in the nation's panel component and materials segments in an effort to develop more comprehensive supply chains in the nation following issued subsidies to local panel makers over the last few years.
Panel makers in China witnessed upward of CNY1 billion (US$161 million) in subsidies from the government while others have received an annual CNY500-600 million over several years as the nation aims to push forth its own industries and decrease reliance on outside makers.
Such developments have allowed makers such as BOE to expand production capacity and even create new facilities including 8.5G fabs. The makers plan to not only weigh in on TV panel opportunities from local vendors but also on international handset panel orders as well, including that for HD and Full HD units. The self-sufficiency rate for China panel makers is expected to increase from 40% in 2014 to 50% in 2015 as a result of the government's moves.
In the upstream segment, TFT LCD core material makers in China currently supply about 20% of overall demand, relying mostly on supply from makers in Taiwan, while the polarizer self-sufficiency rate was at only 23.2% in 2014.
Taiwan makers have been responsible for much of the upstream component supply to China but as China's government pushes forth action to dominate its local market the Taiwan makers will need to look to alternative solutions for staying competitive in the future, said market observers.
