TANGJUN, South Korea " Samsung Electronics Co. Ltd. and Sony Corp. opened their LCD-manufacturing joint venture here last week. Both companies will use the facility as their supply base for the highly competitive LCD TV market.
The partners said the venture, S-LCD Corp., will be dedicated to amorphous thin-film-transistor LDC panel manufacturing and will be the first production line to employ seventh-generation substrates measuring 1,870 x 2,200 mm. The facility will begin operation in the first half of 2005, the companies said.
S-LCD was established in April as basically a 50:50 joint venture, except that Samsung holds one more share and Sony one less. Chief executive officer Won-Kie Chang comes from Samsung, and CFO Keiji Nakazawa comes from Sony.
Although the two companies are competitors in the global TV market, the joint venture will serve both, giving Sony a volume LCD supply base it didn't previously have. Sony's decision to partner with an LCD supplier outside of Japan caused a stir in Japan's LCD industry when the venture was announced in October 2003.
Samsung plans to build four LCD fabs in Tangjung by 2010, with a total investment exceeding about $1.8 billion. Samsung and Sony both invested in the first fab.
Sharp Corp., which started operating an LCD production line using sixth-generation glass in January, is the market's top supplier of LCDs for TV applications, according to DisplaySearch. LG is second and Samsung is third, the research firm said. Those figures may change after S-LCD begins operation next year, but the fab's output will depend on its yield rate. Sharp's yield rate is over 80 percent.
Samsung and Sony signed a cross-licensing agreement on LCD production technology. S-LCD therefore can use intellectual property from both companies. In practice, however, Samsung will provide the major production technology.
S-LCD has a monthly capacity of 60,000 glass substrates. Twelve 32-inch panels or eight 40-inch panels can be cut from a single seventh-generation substrate with minimal waste. Thus, the fab will be able to ship 600,000 of the 32-inch panels or 450,000 of the 40-inch panels per month, assuming a yield rate of 85 percent when production is in full swing around the end of next year.
S-LCD has also completed a module assembly building next to the panel production line. Panels for each partner will be made on the same line, and the output will be evenly divided. The assembly process at the module plant will differ, however. Samsung will customize its panels there, while Sony will integrate such peripherals as backlight and driver circuitry to meet its requirement for TV applications.