LG Display To Invest KRW3.27T For LCD Line Expansion

LG Display, the world's second-biggest maker of LCD panels after Samsung Electronics Co., also said it aims to start mass production at the new facility in the second half of 2010.  "The company has been experiencing a shortage of 20%-30% in received orders due to swelling demand and expanding market share of its major customers," LG Display said in a statement.  LG Display's investment comes at a time when LCD makers in Asia are suffering from a shortage of key panel components such as glass.Such shortages have given LCD makers the ammunition to increase panel prices in negotiations with TV set manufacturers.
 
But analysts say the increase in capacity from LG Display and others raises the risk of a supply glut later this year especially at a time when demand for LCD TVs still remains weak due to the global economic slowdown.
 
"There is a risk of an oversupply after the fourth quarter of this year as the glass shortage pressure is likely to ease and boost utilization rates in Taiwan," Jonathan Hwang, an analyst at Daewoo Securities, said.
 
Sharp also said last week that it will boost liquid crystal display panel production capacity at its main Kameyama No. 2 plant in central Japan by about 10%, to better meet growing demand for the panels used in flat-screen TVs.
 
LG Display began mass production at its existing 8th-generation LCD line in early March.
 
Together with the existing line, the new facility will also manufacture 32-, 47- and 55-inch TV panels, using glass substrates measuring 2,200 millimeters by 2,500 millimeters.
 
The company had spent a total of KRW3.1 trillion ($2.4 billion) for its first 8th-generation line, which has monthly output capacity of 83,000 sheets.
 
However, the latest expansion, called P8E, will likely lift the company's monthly capacity to as much as 203,000 sheets in 2011, which could put it ahead of rival Samsung Electronics, which had a monthly capacity of around 160,000 in the second quarter, according to market research firm DisplaySearch.
 
"LG Display is planning to adjust the ramp-up schedule of P8E flexibly depending on market conditions," it said.
 
"The current plan is to launch P8E initially with monthly capacity of 60,000 input sheets of glass substrate by the second half of 2010 and increase the number according to market circumstances to 120,000 sheets during 2011," it added.
 
All LCD plants of the two Korean rivals have been running at full capacity recently.
 
The LCD TV panel market will reach 219 million units in 2013, up 56% from the 140 million units expected for this year, according to the DisplaySearch.