LG Display Co is planning a 1 trillion won ($1007 million) liquid crystal display production line, adding to the concerns of analysts and investors that an anticipated oversupply will be worse than expected.The production line will probably begin operating in the second quarter of 2009, chief executive Kwon Young-Soo told an analysts` meeting.
LG Display is the world`s second-largest LCD maker by sales after Samsung Electronics.
The investment will be spread between this year and next. The company will probably spend about 600 billion won on the new LCD line this year, boosting 2008 total capital expenditure to 3.6 trillion won, Mr Kwon said.
LG Display`s capital spending will decline to about 1.8 trillion won in 2009 as demand for LCD panels slows, he said.
Asia`s LCD makers, including LG Display, have benefited from capital spending cuts in the past two years and strong demand from emerging markets as supplies were limited.
Next year, however, the LCD industry probably will face an oversupply, with flatscreen makers increasing capacity again to meet fast-growing demand, analysts said.
"This investment will probably worsen overall industry oversupply in 2009," Lehman Brothers analyst James Kim said. "The LCD industry will experience oversupply from October this year."
LG Display said the new sixth-generation line, using glass substrates measuring 1500mm by 1850mm, would have monthly output capacity of 60,000 units and mainly produce panels for monitors and notebook screens.
Mr Kwon said the company was reducing television panel output by switching some of its LCD lines to produce information technology panels, because some of its TV panel clients were experiencing weakening demand.
LG Display`s major TV panel customers include LG Electronics, Philips Electronics, Vizio and Toshiba.
The executive expressed confidence that by strengthening its technology panel business the company would withstand potential oversupply in 2009, citing that as a reason for adding the sixth-generation line.
Some analysts disagree.
"LG Display is not the only one that is shifting LCD lines from TV panels to IT panels.
"Its rivals in Taiwan are doing the same, raising concerns that the entire industry is heading toward oversupply," Mr Kim said.
The Wall Street Journal
WHEN internationally renowned criminal Frank Abagnale forged Qantas cheques 40 years ago he needed customised equipment worth millions of dollars
