The rumor mill says Shenzhen Municipal, Shenchao Optronics and a few domesticTV makers are negotiating the construction of an 8.5G LCD panel production line, with initial investment of more than Rmb10 billion and technology supposedly coming from local companies. 

Real news on this is scarce, but it’s plausible that something like this is being tossed about the halls of government in southern China. First we saw China go after chip fabs; now they are crazy for LCD plants. It appears they haven’t learned that building a fab isn’t the same thing as profiting from a fab.

This isn’t the first leading-edge fab being proposed in China. There are at least six other 8G projects on the drawing board, including a LG project in Guangzhou, a Sharp project in Nanjing, and a Rmb22 billion Samsung-Suzhou government-backed project. Perennially profitless Beijing Orient is also in the 8G game, saying it (and the Beijing government) will spend Rmb28 billion (Orient, Rmb16bn; Beijing gov. Rmb12bn) to build a plant ready for production by 2011.

The goal? To be the world’s second largest base (after Korea) for advanced LCD fabs by 2012. The Chinese figure it makes sense, since they will be the largest market for LCD TVs by late next year or early 2011.