LG Display, the world's No. 2 maker of LCD panels, signed Tuesday (November 3) an agreement with a Chinese city to build an LCD plant there, with the Korean government likely to give the green light to the deal as early as this month.

To build a US$4 billion LCD line in Gungzhou, LG Display plans to build a $1.3 billion joint venture with the city of Gungzhou in which LG will own a 70 per cent share, while the remainder will belong to the Chinese city and Chinese LCD TV makers.

In August, the Korean company signed a memorandum of understanding on the building of the eighth-generation LCD plant with Gungzhou city.

The move came as Seoul is expected to approve the construction as early as this month.

"The decision is expected to be made in late November or early December," Park Tae-sung, a Knowledge Ministry official, told The Korea Herald Tuesday.

The Korean panel makers must win Seoul's approval to build the plants because they will require the transfer of their technology outside the country. While they already have panel module assembly plants in China, this would be the first time Korean panel makers would build LCD panel manufacturing plants overseas.

He said the government is weighing the impact that a technology transfer could have on the Korean economy.

"It is hard to predict (whether or not the government will permit the plan)," he said.

LG Display is one of the LCD makers scurrying to build LCD plants in China, which is expected to become the biggest market.

Japan's Sharp said on August 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.

The Chinese LCD TV market is expected to grow by around 60 per cent 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.

"Our planned LCD line in China will help us grab the initiative of the Chinese market," LG Display said in a news release.

LG Display's envisioned plant, which is expected to start mass production in the first half of 2012, will have the production capacity of 120,000 glass substrates per month, LG said.