China will become a fierce battle field for suppliers of flat panel components to grasp business opportunities as Samsung Electronics, LG Display, AU Optronics (AUO) as well as China-based China Star Optoelectronics Technology (CSOT) and BOE Technology are going to set up their next-generation flat panel plants in China.

New flat panel capacities expected to come online in China during the period from 2012-2012 will include an 8.5G fab each from BOE, LGD and CSOT, a 7.5G fab each from Samsung and AUO, and a 6G fab from Sharp/CEC Panda, said the sources, noting that increased capacities from those fabs may lead to an oversupply of flat panels in 2012-2013.

Even so, the aggressive development of the flat panel industry in China is good news for flat panel component suppliers, especially for those that have been associated with the aforementioned flat panel makers.

For example, Toppan CFI, a color filter affiliate of AUO, has decided to invest US$167 million to set up a production plant in Kunshan, China where the parent company is going to built up its 7.5G panel production plant.

AUO's major component suppliers, including BenQ Materials, Lextar Electronics, Forhouse and Wellypower Optronics, will also benefit from the establishment of the 7.5G fab, the sources commented.

LGD has reportedly mapped out a three-phase long-term development project for its plat panel production in China, aiming to build up three next-generation fabs in China by 2020, indicated the sources.

In addition to bringing its suppliers of glass substrates, gases, LED packaging and backend module makers into the supply chain for its 8.5G fab, LGD will also introduce other associate companies, including LG Chemical, LG Innotek, LG International as well as Heesung Electronics and Kolon Industries, into Guangzhou, China, the sources added.

Although CSOT plans to build up its 8.5G fab in Shenzhen, the company is expected to set up affiliate component and backend assembly plants in Huizhou where the parent company TCL has established a LCD industry park.

While CSOT has signed cooperation agreements with glass substrate makers, it may also outsource color filters to Dai Nippon Printing (DNP) and Toppan, and photoresist materials to Sumitomo Chemical, Toyo Gosei and JSR, said the sources, adding that the supply chain brought in by CSOT's 8.5G fab is likely to generate a production value of close to 100 billion yuan (US$15.04 billion) a year.