Invest in TaiwanDepartment of Investment Services, MOEA
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In just nine years Taiwan's global market share for flat panel displays climbed from 1% to 50% (at the end of 2006), making Taiwan the world's uncontested leader in flat panel display production. Industry analysts predict Taiwan will maintain a 50% leading share for the next few years. Taiwan currently commands 45.9% of the global large-size LCD panel market. Total revenues from large-size LCD panels grew 34.5% to NTD 765.35 billion in 2006. Taiwan's flat panel display industry brought in total revenues of NTD 1.27 trillion in 2006, growing 29% over the previous year. This trillion dollar figure is rivaled only by the semiconductor industry in Taiwan.
Major TFT-LCD makers in Taiwan, such as AU, Chi-Mei Optoelectronics (CMO), CPT, QDI, Hannstar, Toppoly, and PVI, have contributed greatly to the progress of the color imaging industry. In August '06 AU Optronics formally acquired Quanta Display, a move that effectively increased its economies of scale and has since brought its global LCD market share to 20%, giving its South Korean competitors something to worry about, while giving Taiwan's FPD sector the leverage it needs to stay ahead. AU Optronics is increasing LCD TV panel shipments to reach the goal of 20 million pieces by the end of 2007, placing it squarely on top of this market with a 21% global share, CMO, the second largest producer in Taiwan, is barreling ahead with rapidly growing TV flat panel sales. And Toppoly Electronics' takeover of Royal Philips Electronics NV's mobile display unit has significantly increased its market share for small to mid-size LCD displays.
Over 30% of the key components for LCD panels, such as polarizers, backlight modules, color filters and driver ICs, are manufactured in Taiwan, and local component makers such as Optimax (polarizers), Forhouse and Radiant (backlights), Allied Material Technology, Cando and Sintek (color filters), Novatek and Winbond (driver ICs), work very closely with panel makers. Taiwan's LCD panel heavyweights have been busy setting up their own production facilities for key components or purchasing shares in suppliers of color filters, lamps, microchips and polarizers. For example, AU operates two of its own color filter plants and has formed joint ventures with Cando and Toppan CFI. AU has also partnered with suppliers of polarizers (Daxon Talent) and backlight modules (Forhouse Corp.). CMO has invested in driver ICs (Himax Technologies), backlight modules (Chi Lin Technology), and polarizers (Chi Mei Materials Technology). CMO has gone a step further by cooperating with MOEA on the development of a TFT-LCD industrial zone adjacent to the Southern Taiwan Science Park, which will create yet another cluster of LCD production activity. Twelve companies are investing a combined NTD 600 billion in the industrial zone.
Thanks to increasing demand for large-size flat panel TV's, the ramp-up to 7.5-generation LCD panel production has only been successful, and most facilities are now expanding capacity. AU Optronics' first 7.5G fab will be at full capacity by June '07; their second 7.5G fab is currently under construction. CMO's 7.5G plant is currently running at phase-one capacity but industry experts are certain they will maximize capacity by 2008. Plans are also underway for an eighth-generation plant in the Kaohsiung Science Park.
As Taiwan is now the world's largest producer of flat panel displays and the market for components is quite large, the government is inviting foreign suppliers of materials and equipment to build factories in Taiwan, to enable faster and more effective product and service deliveries.
The color imaging industry in Taiwan has grown very rapidly in the past few years. In light of an increasing demand for flat panels in the global market and strong competition, Taiwan's vendors realize the importance of improving their technology and producing the right key components. The cost for raw materials and key components account for more than 70% of the total cost of LCD production, with color filters at around 14% and glass substrate 6% of the total. Taiwan's government has been active in soliciting foreign investors to manufacture these key components in Taiwan. A prime example is 3M's brightness-enhancement film (BEF) plant in the Southern Taiwan Science Park. BEF's average 8% of the total production cost for LCD computers panels and 7.5% of that for LCD TV's. 3M's proximity to downstream production allows for lower costs and strengthens Taiwan's position on the global market. Once the second plant – initially scheduled for construction in '07 – is up and running 3M will have invested a total of NTD 1.2 billion in this venture.
The government offers investors in the color imaging industry special tax reduction and investment incentives. Combined with a highly skilled workforce and abundant experience in the IT industry, Taiwan is the ideal destination for investment in the color imaging industry.
Investments in Taiwan's flat panel industry came to NTD 337 billion in 2006. Glass substrate makers, including Corning, Asahi Glass, Nippon Electric Glass and NH Techno Glass, are investing NTD 100 billion, while color filter makers have plans to invest NTD 100 billion in new facilities.
The booming market for LCD TVs has created new opportunities for growth in the FPD sector. Global flat-panel TV shipments shot up to 39.7 million units in 2006, accounting for 95% growth. Projections are showing that global flat-panel TV shipments could rise to 95 million units by 2010. With insufficient in-house capacity, many TV makers have come to Taiwan to procure the LCD TV panels they need to meet increasing demand. Taiwan-based manufacturers shipped a total of 8.5 million LCD TV panels in 2006,
Nikon has opened an R&D center in Southern Taiwan Science Park to cater to current 7.5G panel production in Taiwan. LCD equipment suppliers ULVAC and Daifuku have also set up shop in the Southern Taiwan Science Park.
Toppan CFI (Taiwan) Co., Ltd. established its first production line for fourth-generation LCD color filters in 2002. Another line for fifth-generation filters started up in 2003..Both production facilities are located in the Southern Taiwan Science Park, which boasts the largest concentration of LCD production in Taiwan. AU Optronics now holds a 39.7% stake in Toppan CFI.
The global market for LCD glass substrate is about US$10 billion, with industry experts predicting a 40% compound annual growth rate by 2007. Since Taiwan is one of the fastest growing markets for LCD glass substrate, Corning, the biggest glass substrate maker, has established two glass substrate plants in Southern (2001) and Central (2006) Taiwan Science Parks separately, and a melting furnace and forming factory in Tainan (2003), to support Taiwan's panel makers in meeting high demand. Corning has also established a research and development center in the Industrial Technology Research Institute (ITRI) – its largest R&D center in Asia – for the development of glass substrate technology. The company has already invested more than USD 1 billion in its Taiwan operations.
Asahi Glass Fine Techno Taiwan, a glass substrate producer invested exclusively by Japan Asahi Glass, has chosen Yunlin in southern Taiwan as their production center. Asahi Glass began mass production in October 2001 and completed construction on a melting furnace in 2003. In April 2006 Asahi began construction on back-end substrate processing facilities in Tree Valley, the new LCD industrial zone adjacent to Southern Taiwan Science Park.
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