In the signing ceremony, the expansion of polarizer business has been revealed.

Key Findings

  • Ningbo Shanshan decided to buy LG Chem’s LCD polarizer business in early June.
  • The signing ceremony between Shanshan Group and LG Chem for the LCD polarizer project in the Zhangjiagang Economic and Technology Development Zone was held on June 28, 2020.
  • The headquarter for the LCD polarizer project, the production site that includes OLED, and the R&D center will be built in Zhanjiagang.

A new joint venture between Ningbo Shanshan and LG Chem will be established in Zhangjiagang, Suzhou

It has been almost 20 days since Ningbo Shanshan acquired LG Chem’s LCD polarizer business. The signing ceremony between Shanshan Group and LG Chem for the LCD polarizer project in the Zhangjiagang Economic and Technology Development Zone was held on June 28, 2020.

It has been known that the joint venture between Shanshan Group and LG Chem will operate the polarizer business with a total sale of $1.1 billion.

A new joint venture between Ningbo Shanshan and LG Chem will be established in Zhangjiagang, Suzhou. Although the exact amount and details of support from the government have not been revealed, a large-scale polarizer production site will be set up in Suzhou. 

In this signing ceremony, Shanshan Group, the Suzhou government, and LG Chem revealed the expansion of the polarizer business, which will be in two stages, in the Zhangjiagang Economic and Technology Development Zone.

As the size of sale was huge, both companies are planning to transfer the polarizer business smoothly in eight to nine months to close the deal. Since the polarizer is a roll-laminated type with various subfilms, there are still several issues to be agreed on, including supply chain management, back-end process, roll-to-panel (RTP) royalty, patents, and some products related to LG Electronics. 

During the signing ceremony, it was announced that the headquarter for the LCD polarizer project, the production site that includes OLED, and the R&D center will be built in the Zhangjiagang Economic and Technology Development Zone. The construction will start from the end of 2020 onwards.

The first stage is to relocate two 2,300mm lines that were shut down in the first quarter of 2020 (1Q20) in Korea to Zhangjiangang. The relocation is scheduled to complete, followed by the mass production, at the end of 2021. The expected annual sales are estimated at approximately Y5 billion.

In the second stage, the R&D center and OLED polarizer production line will be constructed; the new joint venture is also considering investing in polarizer subfilms. After the second stage, the expected annual sales of Shanshan Group will be approximately Y5 billion.

The impact on the polarizer supply/demand after relocation of two 2,300 mm lines

The relocation and mass production of two lines were expected to have polarizer supply issues. When the sale was announced, two 2,300mm lines’ capacities were not added in the polarizer production since they were shut down and were unlikely to restart the mass production. When the new joint venture restarted the two 2,300mm lines, the share of the local Chinese brand in polarizer production is expected to account for 39% in 2022, an increase of 5% compared with the forecast in early June.

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As shown in Figure 2, 83% of total polarizer production in China is made by local Chinese brands, leading the polarizer production in the market.

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In terms of total polarizer supply/demand, there was a concern about polarizer shortage because COVID-19 delayed the planned investment for 2,500mm lines, and the panel demand is expected to increase next year by size enlargement trend.

However, with the relocation of two 2,300 lines, the supply/demand for polarizer is likely to balance out by 2024.

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