The Samsung Electronics Co booth at the 2011 Consumer Electronics Show in Las Vegas. TCL Corp announced that it will invest $100 million to form a joint venture with Samsung.[Photo / China Daily]

South Korean company to take 15 percent stake in joint venture

BEIJING - Samsung Electronics Co is set to obtain a 15 percent stake in Shenzhen Huaxing Photoelectric Technology Co Ltd, a joint venture between TCL Corp and Century Corp.

Shenzhen Huaxing is the LCD TV panel production plant for TCL, which owns 55 percent. Century currently holds the remaining 45 percent.

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After the equity swap, TCL will retain its 55 percent stake and Century's share will drop to 30 percent.

TCL said that the transfer is part of a strategy to deepen its business in the upstream of the TV industry through cooperation with Samsung, one of the world's largest manufacturers of flat screen TVs and mobile phones.

Shenzhen Huaxing was established in November 2009 with investment totaling 24.5 billion yuan ($3.76 billion), as TCL launched its production line for 8.5-generation panels, so far the highest-level of domestic thin-film transistor liquid crystal display (TFT-LCD) production.

Under a five-year coordinating agreement, Shenzhen Huaxing will supply Samsung with 2.55 million LCD TV modules annually as an Original Design Manufacturer, accounting for 15 percent of Shenzhen Huaxing's annual total production capacity.

The Shenzhen-listed TCL said the equity transfer won't alter Shenzhen Huaxing's initial development strategy.

Once production begins in August, Shenzhen Huaxing will produce 17.5 million units of LCD TV modules annually in sizes ranging from 26 inches to 55 inches.

TCL also announced that it will invest $100 million to form a joint venture with Samsung. Suzhou Samsung Electronic LCD Co Ltd, which produces 7.5-generation LCD panels in Suzhou, Jiangsu province, will receive the investment and TCL will own 10 percent equity of the company.

"The cooperation between TCL and Samsung will increase the international competitiveness of China's electronics industry and perfect the LCD TV industry chain," said Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission of China.

Gao Hongjin, director-general at the LCD Branch of China Optics & Optoelectronics Manufacturers Association (COEMA), said that, apart from complementing its product lines, TCL will also take some of the profits from Samsung's project.

Samsung and Suzhou's local government will invest a total of $2.25 billion in Suzhou Samsung's 7.5-generation panel plant.

The LCD panel is a core component of TV screens, representing 40 percent of the total price of a typical TV. At present, domestic producers mainly rely on LCD panels from Japan and South Korea.

"We will continuous to extend the industrial chain to the field of core components and complete the integration of the flat-panel TV industrial chain to coordinate the upstream and downstream within the industry," said Li Dongsheng, TCL's chairman.

According to Display Search, a global market research and consulting firm, China will become the world's largest market for LCD TVs by 2012, accounting 21 percent of the global LCD TV market.

Display Search also estimates that the global sales volume of LCD TVs will reach 188 million units in 2012.