LG Display, the world's No. 2 maker of LCD panels, yesterday signed an agreement with the southern Chinese city of Guangzhou to build an LCD plant there, with the Korean government likely to OK the deal (and the technology transfer) as early as this month, media reported.

To start, LG plans to build a $1.3 billion joint venture with the city in which LG will own a 70 percent share. The rest will belong to the Chinese city and Chinese LCD TV makers, such as Skyworth -- with which it already runs a LCD module JV. Presumably, the other $2.7 billion will be invested over the lifetime of the plant. If realized, the LG plant would start mass production in the first half of 2012, with capacity of 120,000 glass substrates per month, LG said.

There's a chance the deal will hit some snags, since it requires the transfer of LG's technology outside the country. While they already have panel module assembly plants in China, this would be the first time a Korean panel makers would build LCD panel manufacturing plants overseas. Taiwan panel makers are also considering LCD panel production plants in China, but must first win over the Taiwan government.

A host of other companies are also looking at setting up advanced panel production in China. Japan's Sharp said on Aug. 31 that it agreed to set up a venture with China Electronics Corp. to build an eighth-generation LCD plant in Nanjing. In early October, Korea's Samsung Electronics, the world's top maker of LCD panels, also announced its plan to build a 2.6 trillion won LCD plant that uses 7.5-generation glass substrates in Suzhou. Early this week, we also wrote about Shenzhen subsidizing an 8.5G plant.

The Chinese LCD TV market is expected to grow by around 60 percent to 40.8 million units in 2012, from 25 million units this year. If so, it would overtake North America and Western Europe as the biggest market, according to market research firm DisplaySearch.

Note: Basic details sourced from Korea Herald