Construction Work Begins on TCL's LCD Module Project in Huizhou, Guangdong Province

Construction Work Begins on TCL's LCD Module Project in Huizhou, Guangdong Province

April 15th,2008

April 15th, 2008, Huizhou TCL Corporation s popular LCD TV module project, officially took up residence on a site in Huizhou, Guangdong Province. TCL Corporation held a ceremony today to mark the beginning of work on the LCD module project in Huizhou Zhongkai High-tech Industrial Development Zone.

The project was financed by TCL Corporation, and Samsung Electronics will act as a partner, providing support for LCD panels and related technologies. The ceremony was attended by Director of the Guangdong Provincial Department of Information Industry, Wen Guohui, Secretary of Municipal Party Committee of Huizhou, Huang Yebin, Mayor, Li Ruqiu, TCL President, Li Dongsheng, and Vice-president of Samsung Electronics LCD division, Li Zhixie.

Industry insiders say that this move signifies TCL Corporation s official entry into the upstream of the LCD TV industry s value chain, and also lays solid foundations for strengthening the company s core business competitiveness and future development.

According to the briefing, Annual production for the first phase of TCL s LCD module project is predicated to be 2.33 million units. In 2008-2009, TCL Corporation s LCD TV production capacity will be around 5 to 6 million units. Once this project enters production, it will satisfy some of the corporation s requirements in terms of whole unit modules.

The project has received strong support from the relevant departments of the provincial and city governments. During the planning stage, Huizhou city established a construction guidance group composed of government leaders, in order to fully support the construction of the project.

At the ceremony, Wen Guohui, Director of the Guangdong Provincial Department of Information Industry, indicated that: "TCL Corporation is one of Guangdong Provincial Department of Information Industry s key assistance and service businesses. The provincial government will assist large-scale electronics businesses, including TCL, to expand and strengthen their operations, and to raise the overall competitiveness of the information industry in Guangdong. This will be done through supporting policies, improving the investment environment and fostering independent innovation capabilities."

Li Ruqiu, Mayor of Huizhou City, believed that: "The choice of Huizhou as the site for TCL s LCD module project is of enormous significance for our attempts to optimise, upgrade and restructure the information industry in Huizhou, as well as to strengthen key industries and develop the local economy."

TCL President, Li Dongsheng, commented: "Chinese TV manufacturers are under pressure from sweeping changes and technical improvements in the industry, and we should move into the mid-to-high end of the industry value chain as soon as possible, in order to create core competitiveness in this flat panel era. The commencement of TCL s LCD module project is extremely significant, and with the support of the government of Guangdong Province and Huizhou City, as well as our great partnership with Samsung Electronics, we are very confident of its success."

LCD TV modules account for 70% of the production cost of an entire unit, and so entering the LCD TV module business not only effectively extends the LCD TV value chain, increasing the potential for added value, but is also beneficial in terms of increasing technical innovation capabilities. The long term strategic value of the LCD module project will manifest in the following areas: 1) significant reductions in overall costs through the system design by integrating modules with the whole unit; 2) by participating in the manufacture of modules, the manufacture of modules and entire units is gradually shifting to the domestic sector, thereby comprehensively controlling and lowering purchasing costs; 3) system design of whole units and modules will lead to internal standardisation and external differentiation of module products, increasing the overall competitiveness of products; and 4) the intermediate circulation chain is reduced through direct connections between entire units and modules, accelerating turnover rates and avoiding the risk of decreases in the price of panels, thereby improving overall operational efficiency.

The Chinese TV enterprises have, in recent times, unintentionally chosen to take a common route by using various forms of cooperation to break into the upper stream of the CD industry chain, in order to break through technical bottlenecks and increase technical competitiveness in this flat panel era. Industry insiders believe that taking on the upper stream module manufacturing field is a positive step in terms of adjusting domestic TV businesses to transformations in the industry and achieving technical and industrial improvements.

It is understood that the LCD module project is a vital element in TCL s future key components operations. The Managing Director of the project is TCL Corporation s senior vice-president, Zhao Zhongyao, while the General Manager of the project is He Chengming (also an assistant president of TCL Corporation).

He Chengming is a nationally renowned display technology expert with a wealth of experience in the management of LCD module factories. He was one of TCL s new expert talents recruited in 2004. TCL Corporation has been accumulating a large talent pool for this project over the last three years, and has formed an expert team led by He Chengming.

TCL Corporation s 2007 business report demonstrated that the corporation has successfully achieved a return to profitability, and is on track towards healthy international development. TCL Corporation recently issued its 2008 first quarter operational business results, which show a growth of over 100% in comparison to the same period last year.

In 2008, TCL will increase LCD TV production, and production and sales figures are predicted to show large-scale growth in comparison to the same period in the previous year. It is understood that the TCL LCD module project is the best funded, most technically advanced module-unit integration project of any domestic TV business.

The project is of great significance for TCL Corporation in terms of building global competitiveness.