[Taiwan Chip Dispatch] Injecting "Semiconductors" into Idle LCD Fabs... All-Out Push to Boost Memory Output

Materials, Parts, and Equipment Move In Where LCDs Moved Out
Securing Cleanrooms Needed for Chipmaking Processes
Will This Ease AI Memory Bottlenecks?

Global semiconductor manufacturers are accelerating efforts to expand their chip mass-production capacity by successively acquiring aging liquid crystal display (LCD) panel plants. As the semiconductor industry enters an "ultra cycle" on the back of the artificial intelligence (AI) boom, this move is seen as a strategy to reduce the time and cost burden associated with building new fabs from scratch.

According to Taiwan's Economic Daily News on February 21, semiconductor manufacturers are securing LCD panel plants whose operations have been suspended or whose production efficiency has deteriorated, and are converting existing panel production lines for semiconductor processes. Instead of building new fabs, they are choosing to acquire existing cleanrooms and rapidly scale up production in a short period of time.

Cleanroom at Samsung Electronics' semiconductor production plant. Samsung Electronics

A cleanroom is a space that minimizes airborne dust particles and keeps indoor temperature and humidity constant, thereby preventing foreign substances from entering electronic components. LCD plants are also equipped with cleanrooms, which can be repurposed for semiconductor processing. In Japan, where the display industry has entered a sunset phase, conversions of LCD plants into semiconductor lines are also in full swing.

The LCD panel industry has long been under pressure from prolonged price declines, low profitability, and a heavy depreciation burden. Major Taiwanese panel makers such as AUO and Innolux have halted LCD production lines or moved to sell their fabs.

By contrast, the semiconductor industry urgently needs to expand production capacity to respond to rising demand for AI servers, high-performance computing (HPC), and memory semiconductors. In response, major semiconductor companies such as TSMC, Micron, ASE, and SK Hynix are actively securing cleanrooms in existing LCD plants.

In particular, Micron of the United States, the third-largest DRAM supplier after Samsung Electronics and SK Hynix, is aggressively expanding its production facilities to gain market share.

In August 2024, Micron acquired two fabs located in Taichung and Tainan from AUO for 8.1 billion New Taiwan dollars (about 338.7 billion won). More recently, with the aim of increasing DRAM output, it acquired the "P5 plant" (P5 fab) in Tongluo, Miaoli County, owned by Taiwanese semiconductor foundry company PSMC, for 1.8 billion dollars (about 2.65 trillion won). Micron has chosen to acquire PSMC's already completed fab and then fill it with cutting-edge DRAM equipment.

Industry observers expect that the trend of converting LCD plants into semiconductor production facilities will help alleviate bottlenecks in memory semiconductor supply. It normally takes years to construct a semiconductor plant and build out the cleanrooms inside, but by shortening this period, companies can better respond to the explosive demand in the AI market. TSMC has also acquired a plant from Innolux, a panel maker under Taiwan's Foxconn Group, and is using it for packaging (assembly and testing) processes.

Taiwanese media outlets such as DigiTimes have reported observations that SK Hynix is also exploring opportunities to acquire or lease display plants at home and abroad. However, an SK Hynix representative drew a line under this, saying, "We are not considering it."

Taiwan Economic Daily News = Reporter Chen Ling / Translation = The Asia Business Daily

*This column is published under a strategic partnership between The Asia Business Daily and Taiwan's Economic Daily News.