Foxconn Joint Venture to Build $8.8 Billion LCD Plant in China

A joint venture between Hon Hai Precision Industry Co, known as Foxconn, and Sharp Corp plans to build a CNY 61 billion ($8.8 billion or roughly Rs. 59,685 crores) factory in China to produce liquid-crystal displays (LCDs).

Sakai Display Products Corp's plant will be a so-called Gen-10.5 facility specialising in large-screen LCDs and will be operational by 2019, the company said at a signing event with local officials in Guangzhou on Friday. It said the plant will have capacity equating to CNY 92 billion a year.

The heavy investment is aimed at increasing production to meet expected rising demand for large-screen televisions and monitors in Asia.

Global LCD output was hit this year by the closure of a Samsung factory that accounted for 3 percent of the market, as well as factory stoppages in Taiwan after an earthquake in March.

(Also see: Sharp-Foxconn Said to Stop Supplying TV Panels to Samsung to Stem Losses)

China's largest LCD panel maker, BOE Technology Group, began construction on its own Gen-10.5 plant in Hefei in December last year, with production scheduled to begin in 2018.

In May, Shenzhen China Optoelectronics Technology Co, a subsidiary of TCL Corp, announced that it would begin construction on a CNY 50 billion LCD plant in Shenzhen.

Sakai Display Products Corp's plans for the Guangzhou plant come as Hon Hai seeks to turn the joint venture into a subsidiary, investing a total of CNY 15.1 billion in the company.

The venture will also sell 436,000 shares for CNY 17.1 billion to an investment co-owned by Hon Hai Chairman Terry Gou, giving Hon Hai a 53 percent interest in the business and lowering Sharp's stake from to 26 percent from 40 percent.

© Thomson Reuters 2016