Samsung, LG increase flat-panel production, investment

Two of the world's biggest flat-panel display makers, Samsung Electronics Co. Ltd. and LG Electronics Inc., are expanding and investing in panel production as competition increases in the big-screen TV sector.

LG began mass-production at a new PDP (Plasma Display Panel) line last week and Samsung started equipment installation of a new LCD (liquid crystal display) production line at the beginning of August. On Monday, Samsung said it will invest a further 1.8 trillion won (US$1.7 billion) to double the capacity of the new line.

The expansion plans are based on two bets. The first, that the market will continue expanding, is all but assured. Consumers are buying flat-panel TVs like never before thanks to intense competition that is driving down prices and there are no signs of this growth stalling. The second bet is related to the screen technology. LG is making PDP panels and Samsung is making LCD. Each has its strong and weak points and the likely winner of the technology race depends on who you ask.

In volume terms, LCD dominates the market, in part because it's used in cheaper and higher volume flat-panel TVs. With a few exceptions, LCDs can be found in TVs up to around 40-inch screen size. Televisions based on PDPs begin in the 30-inch class and run all the way up to the largest flat-panel TVs on the market. It's in the middle ground where the technologies intersect that some of the fiercest competition can currently be found.

The competition is based on both price and technology and it's here that the new manufacturing lines come in. Newer production machinery can handle larger pieces of mother glass, which is the glass on which panels are made, and so economies of scale mean the per-panel production cost is lower. It also means more panels can be made in less time, further providing an advantage. The latest lines can also make cutting-edge panels that are brighter, crisper and deliver an all-round better picture than older manufacturing lines.

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600450 Samsung, LG increase flat-panel production, investment
Date: 7 September 2005

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