LCD TV makers flock to China

China's fast-growing market for flat panel television sets is attracting fresh investment from foreign components makers.

Samsung Electronics, the world's largest flat panel maker, said yesterday it would set up a $2.2bn joint venture in China to meet growing demand for liquid crystal display panels in the world's fastest-growing major economy.

Separately, Foxconn, a unit of Hon Hai, the world's largest electronics contract manufacturer, agreed to set up a $1bn facility for the production and assembly of LCD and LED components in the city of Chengdu.

The investment plans reflect China's emergence as a key market for LCD panel makers during the global economic slowdown.

TV makers in the country are ramping up production of flat panel TVs, driven by robust consumer demand.

LCD makers have enjoyed higher-than-expected demand this year thanks to Beijing's subsidies for electronics purchases in rural areas.

The Rmb20bn ($2.9bn) stimulus plan has boosted sales of home appliances.

Samsung's announcement followed that of its smaller rival LG Electronics that it would build a $4bn LCD factory in Guangzhou in southern China. Sharp, Japan's largest LCD television maker, said in June it was in talks with a partner in China to start producing LCD televisions there.

Market research group DisplaySearch forecasts that LCD television shipments in China will grow 87 per cent to 25m units this year, and by a further 32 per cent next year.

According to the China Electronic Chamber of Commerce, 65 per cent of flat panel TV purchases are expected to benefit domestic brands such as TCL or Changhong.

Samsung said the joint venture, in Suzhou, would build a 7.5-generation LCD plant for 40-inch panels. But it declined to name its joint venture partners, saying the project was subject to approval from the Korean and Chinese governments.

"Demand in China is exploding. So producing panels there will be more efficient," Samsung said.

Strong demand from China boosted LG Display's third-quarter earnings to a record this week.

Net profit almost doubled to Won559bn ($483m) in the July to October period, from the same period a year ago.

Samsung shares fell 3.74 per cent to Won746,000 and LG shares lost 4.2 per cent to Won31,850, underperforming the Korean market, which fell 1.1 per cent.

* China National Offshore Oil Corporation (CNOOC), China's state-owned energy company, is in talks with StatoilHydro, the Norwegian energy company, to cover the cost of drilling exploration wells in the US Gulf of Mexico, a source close to the deal said.

The agreement could be signed within the next two weeks and is worth a little more than $100m.

The deal gets China into the US oil market just four years after its bid for Unocal led to a US political and public backlash.