BOE Technology Group starts building its sixth-generation (6G) liquid crystal display (LCD) assembly line in Hefei City, Anhui Province, on April 13, 2009.

As the first one of its kind in the Mainland China, the to-be-established 6G LCD assembly line will mainly provide thin-film transistor-liquid LCDs (TFT-LCDs) used in 37-inch-and-below-sized TVs and computers.

With a total investment of CNY 17.5 billion, the project is designed to produce 90,000 pieces of glass substrate each month after kicking off production in the fourth quarter of 2010, according to an agreement inked by the Beijing-headquartered TFT-LCD maker and its cooperators in September 2008.

BOE Technology gained green light from the China Securities Regulatory Commission (CSRC) to sell new shares to fund its 6G LCD assembly line project on April 1, 2009, two weeks before its well-brewed project breaks earth.

BOE Technology will enjoy preferential policies from the Hefei government in terms of land usage, land price, energy supply, financial support, as well as loans and subsidies, disclose people in the know.

On the other hand, the Beijing LCD maker is installing equipment for its CNY 3.1 billion 4.5G LCD assembly line, although it earlier warned of a CNY 1 billion loss for the entire 2008, according to sources.

The global LCD industry slipped directly into a downturn after LCD panel price posted a 60% slump since September 2008, when the financial crisis took its toll on the global economy. SVA (Group) Co., Ltd., one of the archrivals of BOE Technology, is struggling against insolvency.

Market observers say the return on investment from the BOE 6G LCD project will depend heavily on the market conditions when the project starts operation - provided that demand for 6G LCDs bounced back when the being-constructed assembly line kicked off production, the company would get a fat return.

BOE Technology is likely to pump more than CNY 10 billion out of the CNY 17.5 billion into equipment, anticipate some of the industry insiders.

Date: Arp.22