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Display Demand Spurs Investment

Electronic Materials: Japan’s Fujifilm and Kuraray expand LCD film capacity

by Jean-François Tremblay
July 26, 2010 | A version of this story appeared in Volume 88, Issue 30

Credit: Fujifilm
Fujifilm’s triacetate cellulose films are made in clean rooms.
Credit: Fujifilm
Fujifilm’s triacetate cellulose films are made in clean rooms.

Fujifilm and Kuraray, two producers of key materials used in the manufacture of liquid-crystal displays (LCDs), will invest hundreds of millions of dollars in Japan in new production capacity for polarizer films. The driver behind both projects is strong global demand for flat-display television sets.

Fujifilm is spending a total of $460 million on new production lines for making triacetate cellulose films. Kuraray will spend $57 million to expand production of polyvinyl alcohol-based film.

Kuraray has a near-monopoly in the market for the polyvinyl alcohol films that are the base films in LCD polarizers, which sharpen TV displays. The company will add 20 million m2 of capacity at a plant in Ehime, Japan.

With a market share in excess of 80%, Fujifilm dominates the market for triacetate cellulose films used as a protective layer on the polarizers. The company is adding three production lines in Japan for films that will be used to make TVs that are 40 inches or wider. Fujifilm says demand for such big-screen TVs is growing by more than 30% annually.

The electronics industry produced 163 million LCD TVs in 2009, says David Hsieh, a Taiwan-based vice president of the market research firm DisplaySearch. The industry will make 208 million units this year, and output will jump to 227 million in 2011, Hsieh predicts. Demand is strongest in China, Southeast Asia, and Latin America, he adds.

“Some factories making LCD panels will struggle to be profitable in the third quarter of this year, but annual growth is on the whole quite strong,” Hsieh says.

The LCD film business has proven to be an important one for Fujifilm as it diversifies away from its former core line of photographic films. The company is also the exclusive producer of a particular type of film that widens the angle at which LCDs can be viewed.

Although expensive, the expansions will pay off for Fujifilm and Kuraray, Hsieh predicts. “For these companies, it’s a long-term investment.”



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