LCD panel prices plummet, Guo Taiming postpones new factory plan

Foxconn founder Terry Gou is looking for new investors to inject capital into a new advanced LCD panel factory he built, sources said.

The 61 billion yuan ($8.5 billion) Guangzhou plant was supposed to be producing large-size, advanced liquid crystal panels at full capacity this year, but a global oversupply and a sharp drop in LCD panel prices have delayed those plans, according to multiple sources.

At least three Japanese display equipment suppliers were told in August to suspend deliveries to the Guangzhou 10.5-generation LCD panel factory. Just the month before, the Guangzhou factory had successfully completed the trial production of 65-inch LCD panels. One of the equipment suppliers said that if more equipment orders were canceled, it would study the possibility of taking legal action against Japan's Sakai Display Products Co., Ltd. (SDP), as the latter is the main entity responsible for the Guangzhou factory. Terry Gou holds more than 50% of SDP shares, and Foxconn's Sharp holds more than 25%.

Gou and the Guangzhou municipal government signed a deal for the 10.5-generation LCD facility in 2016, with Gou saying the project was in line with the company's long-term strategy to develop 8K high-resolution technology.

The project, one of Guangzhou’s largest ever investments, broke ground in March 2017. The Guangzhou project was supposed to be operating at a capacity of 90,000 large displays per month by 2019, but LCD prices have fallen sharply over the past two years due to capacity expansion by heavily subsidized Chinese display manufacturers.

Faced with oversupply concerns, Foxconn revised its plans for the Wisconsin plant in June 2018, choosing to build sixth-generation LCD equipment instead of 10.5-generation equipment. Earlier this year, Nikkei reported that the Guangzhou project only reached partial production capacity in the third quarter of this year, and full operations were delayed until at least six months in 2020 due to market uncertainties.

In early August, there were reports that Foxconn was exploring the possibility of selling the factory. However, Foxconn responded that the Guangzhou factory was owned by Terry Gou, Sharp and the Guangzhou Municipal Government and had nothing to do with Foxconn.