China s Largest Independently Invested Integrated LCD TV Manufacturing Project Goes into Production

China s Largest Independently Invested Integrated LCD TV Manufacturing Project Goes into Production

September 30th,2009

Leaders at the ceremony witness the inauguration of TCL s Integrated LCD TV Factory and the first batch of products to come off the assembly line.

On September 16, 2009, TCL Corporation s Integrated LCD TV Factory project which is a landmark of the upgrading of China s TV industry, came into production as China s largest independently invested and most technologically advanced integrated LCD TV manufacturing project. The day also saw the official start of Phase Three of the construction of the TCL LCD Industrial Park.

A total of CYN 2.6 billion has been invested in the construction of the TCL LCD Industrial Park, which is to be built in three phases. Costing CYN 1.2 billion in investments, Phase One, which is capabel of manufacturing eight million LCD modules per year, had already come online last December. The integrated factory that came online this year belongs to Phase Two. The construction Phase Three of the TCL LCD Industrial Park has already begun.

Leaders at the ceremony usher in Phase Three of the construction of the TCL LCD Industrial Park.

The integrated LCD TV factory costs almost CYN 600 million in investments, occupies a floor space of about 53,700 square meters, and currently has eight active general assembly lines. The factory will produce 700,000 integrated LCD TV sets in 2009. By the time the industrial park finishes construction in early 2010, it is expected to produce three million 15- to 55-inch LCD TV sets and 2 million units of large-size LCD components per year.

TCL Corperation believes the factory integration project to further reduce production costs, thereby raising the company s competitiveness in the LCD business. In addition to helping the company meet international and domestic market demands, the increase in production capacity will stimulate development of the local economy by bringing an upward lift to LCD-related manufacturing and services.

Phase Three of the TCL LCD Industrial Park has already begun construction. The industrial park is divided into three areas: Techne Component Indutrial Park, Home Networking Business Unit, and Integrated LCD TV Factory. Once completed, the industrial park will be able to produce more than five million LCD TV sets, eight million LCD modules, six million backlight units and LED light, also 20 million DVD products per year.

Mr. Lou Qinjian, Vice Minister of the Ministry of Industry and Information Technology, shares that TCL Corporation s LCD projects have realized the principles spelled out in official documents like Outline Concerning Regional Development of the Pearl River Delta and Planning on Adjusting and Revitalizing the Electronic Information Industry.

Other measures like hastening the pace of industry upgrades and pushing for economic transformation are all part of TCL Corporation s strategy to raise the core competitiveness of China s electronic information industry. A key step by a Chinese enterprise to build up its own production chain and nurture its own core competitiveness in the age of flat-screen TV, the TCL LCD Industrial Park has also initiated the upgrading of China s overall TV industry.

Mr. Xiao Zhiheng, Standing Committee Member and Deputy Governor of Guangdong Province, pointed out at the inauguration ceremony that TCL Corporation s industrial park represents a key item in the company s drive to upgrade the flat-screen TV industry and raise the company s core competitiveness. A new milestone for Huizhou, Guangdong province, and China s electronic information industry, the industrial park s coming online provides an important model for industrial and structural upgrade, and strengthening pillar industries, meanwhile raising the international as well as domestic competitiveness of the electronics industry in Guangdong and the greater Pearl River Delta and the local economic development.

TCL s integrated LCD production line in action

TCL Chairman of the Board and President Mr. Li Dongsheng believes that the integrated factory will work with the LCD Module Factory that was completed last year and the Backlight Module Factory that came online this year to deliver an innovative production line, which will both lowers costs and strengthens industrial matching capacity. Moreover, the new factory will enhance TCL s overall control over the production chain and capacity for research and development (R&D).

In addition to setting up the Integrated LCD TV Factory in Huizhou, TCL has renovated its manufacturing bases in Wuxi and Chengdu and built factories focused specifically on LCD TVs in southern, eastern, and western China. As for integrated production, TCL has already upgraded its TV operations into the LCD phase.

Industry insiders believe that, under strong government support, the successful transition of China s TV industry from CRT to LCD as led by TCL suggests that the industry is gradually gaining momentum in its effort to upgrade, a positive development for the international and domestic competitiveness of Chinese brands.

About TCL LCD Industrial Park

A Summary on TCL LCD Industrial Park

The TCL LCD Industrial Park represents TCL s strategy to raise the core competitiveness of China s electronic information industry by following the guidelines listed in official documents like Outline Concerning Regional Development of the Pearl River Delta and Planning on Adjusting and Revitalizing the Electronic Information Industry, by hastening the pace of industrial upgrade, and pushing for economic transition.

Located in the HZZK National Hi-Tech Industrial Development Zone, the industrial park represents China s largest and most technologically advanced independently invested factory project. As an integrated LCD manufacturing and R&D base owned by TCL Corporation, the industrial park is divided into three sections: Techne Components Park, Home Networking Business Unit, and Integrated LCD Factory.

The industrial park represents a key item in the company s drive to upgrade China s flat-screen TV industry and raise theTCL s core competitiveness. The park s completion holds important implications for for industrial and structural upgrade, and strengthening pillar industries, meanwhile raising the national as well as provincial competitiveness of Huizhou s electronics industry,and the local economic development.

. Once completed, the CYN 2.6 billion industrial park will be able to produce more than five million LCD TV sets, eight million LCD modules, 20 million DVD products, and six million backlight and LED units per year.

TCL Integrated LCD Project

TCL Corporation is China s major electronic information display enterprise. To take advantage of market opportunities, broaden the national production network, and expand both the company s upstream and downstream presence in the production chain, TCL Corporation has built a state-of-the-art integrated LCD TV factory that oversees midstream and downstream production in the HZZK National Hi-Tech Industrial Development Zone. The factory will be producing mainly 32- to 52-inch LCD HDTV modules.

Costing CYN 1.2 billion, TCL Corporation s LCD HDTV module project contains eight LCD HDTV production lines that can manufacture up to eight million output units, which will consist mostly of 32- to 35-inch LCD HDTV modules, per year.

The project will be divided into two stages. Costing CYN 620 million, Stage One will contain four LCD HDTV production lines that can produce up to four million output units per year. The project has already received CYN 322 million in investments in 2008. CYN 291 million of the investments that the project has received will be used mainly to purchase and install factory hardware. So far, the project has already completed the factory space and four production lines, which have already begun production.

TCL LCD Integration: Phase Two Integration Project

Starting on December 22, 2008, the 53,700-square meter and CYN 598 million TCL LCD TV integration project began production in September 2009. The project has already completed eight general assembly lines (12 planned) , nine PCBA lines (12 planned), 12 SMT lines (21 planned), 14 plastic injecting lines (39 planned), and three spray coating lines (6 planned).

Once completed, except for the LCD modules, the project will be able to operate every step in the LCD TV production process, and produce three million 15- to 55-inch LCD TVs and two million large-size LCD components per year. The project is expected to bring in revenues of CYN 10.7 billion per year, which will greatly improve TCL s profit margins.

The project matches not only government policies and guidelines on new display developement but also the developmental guidelines of both Guangdong Province and Huizhou Municipality, so it will promise a bright market future. The completed project will expand TCL Corporation s LCD TV production capacity to meet the growing market demands, boost local economic development , and stimulate related manufacturing and services.

The intelligent setup of the integrated factory will also improve TCLCorporation s business model. The significant economic rewards that TCL will gain will be derived mainly from the following three improvements. Firstly, improvements in packaging and product circulation will reduce costs. Secondly, improvements in production flow will reduce shelf, delivery, and response time.

Thirdly, a streamlined and improved production flow will raise both efficiency and quality.

TCL Home Networking Business Unit

Established in August 2006, TCL Home Networking Business Unit operates directly under TCL Multimedia Technology Holdings, Ltd. The business unit enjoys long-term strategic relations with many renowned international enterprises.

The business unit handles mainly audio products. Its latest audio and video products have already entered R&D and will enter trial production at the end of 2009, at that time, the production is expected to reach 30 million output units per year. TCL Home Networking is now positioned to become an industry leader.

TCL Home Networking Business Unit now has close to 3,000 employees, of which 369 are technical workers. Putting customer and market first and working closely with our partners, TCL Corporation is committed to improving itself and maintaining profitability. The company has also trained a large contingent of hardware experts to ensure the company s future technical leadership.

TCL Components Park

Established on December 24, 2007, Huizhou Techne Electronics Co., Ltd. is a subsidiary entirely controlled by TCL with a registered value of CYN 227 million. The five companies that operate under Huizhou Techne Electronics are Huizhou Shenghua Industrial Co., Ltd., TCL King High Frequency El, Co., Ltd., TCL Hyperpower Batteries Inc.

, TCL Display Technology (Huizhou) Company Limited, and Huizhou TCL Coretronic Co., Ltd. These companies mainly produce and market hardware, plastic mold components, connectors, PCBs, electronic tuners, LCM little module displays, polymer lithium ion batteries, and LCD backlight modules.

The construction of Techne Components Park is planed as a whole but built in three phases. Phase One projects include precision hardware and assembly components. Handling mainly production modules, the precision hardware project is expected to generate six million output units and sales of CYN 350 million per year.

The assembly components project, which handles mainly semi-completed goods, is expected to generate 10 million output units and sales of CYN 250 million per year when completed in 2010. Phase Two projects include precision plastic molds and electrical source. The precision plastic molds project which mainly handles plastic production modules, is expected to generate four million output units and sales of CYN 200 million per year.

For LCD power source, the electrical source project is expected to generate 12 million output units and sales of CYN 500 million per year when completed in 2011. Phase Three projects include Anda Plastic, mold center, and optical material cutting. Handling mainly plastic TV/AV products, Anda Plastic is expected to generate 10 million output units and sales of CYN 150 million per year.

And the mold center, which is for handling mainly hardware and plastic molds, is expected to generate 2,000 output units and sales of CYN 80 million per year. Handling mainly optical material processing, the optical material cutting project is expected to process 100,000 square meters of output and generate sales of CYN 300 million per year when completed in 2012.

Upon completion, Techne Components Park is projected to generate annual sales of CYN 1.8 billion with more than CYN 100 million in profits.

Huizhou Techne Electronics Co., Ltd. s developmental goal is to become a trusted consumer electronics brand and the most innovative integrated components provider. The company plans for the next five years are to aggressively position itself in LCD production chain, become the leader in niches occupied by the companies under its umbrella or markets where these companies enjoy core technological advantages, and realize sales of CYN 6.

6 billion with profits of CYN 350 million by 2013. Techne Electronics is hoping to become a publicly traded entity by building itself into a corporation that enjoys a synergetic advantage.

TCL Canyu Photoelectric Backlight Project

Established on July 2, 2009, Huizhou TCL Canyu Photoelectric Co., Ltd. handles the manufacturing, sales, and after-sales services of backlight modules and other optical components. TCL Canyu Photoelectric is currently actively developing its backlight module project.in order to shorten the supply chain, reduce overstock risk, and improve the internal components supply chain, morevoer, realize TCL Corporation s expections of flat-screen TV R&D.

The output from the project will directly supply the LCD module production line. In addition to cutting down the packaging and transportation costs of backlight modules, the project will help realize the integration of backlight module, LCD module, and assembly machine into one production line, which will not only further reduce costs but will also improve TCL s assembly capacity.

Significance of TCL LCD Industrial Park

Once completed, TCL LCD Industrial Park will become China s only large-scale industrial park that serves as a focal point of many resources. The industrial park will widen the gap between TCL Corporation and its competitors to give the company a definite lead in the industry. TCL Corporation uses functional backlight control procedures to reduce power consumption and improve contrast ratio of it products.

The company also takes advantage of video frequency technique integration, centralized data acquisition and process, improved color reproduction, and overall feature boosts to improve overall quality and functionality and to accelerate product R&D. The reduction in packaging materials and transportation costs, the integration of data processing microchips, and the integration of mechanical structures all encourage the adoption of a concentrated electrical source, which raises the energy efficiency of LCD TV production.

By reducing the number of repeated steps, well-defined procedures of the production process cut down costs significantly, thereby improving TCL Corporation s competitiveness.

The coming online of TCL Corporation s integrated LCD Module Factory marks an important step by China s TV industry as led by TCLCorporation in LCD core competitiveness and industrial upgrade. The TCL LCD Industrial Park also represents a new milestone for Huizhou, Guangdong, and China s electronic information industry.

With the LCD Module Factory completed last year and the Backlight Module Factory that coming online this year, the Integrated LCD TV Factory will realize TCL s innovation and accomplishments in the integration of backlight module, LCD module, and overall production flow. The factory will not only greatly reduce LCD TV production costs and improve industrial matching capacity but will also enhance TCL s control over the LCD production chain.

As the company constantly seeks to improve itself, the factory is bound to have an important impact on TCL Corporation s product R&D and core competitiveness.