LG may double plasma panel capacity by 2007

LG Electronics, the world’s No. 2 maker of plasma display panels, said on Sunday that it might add another production line in 2007, almost doubling existing capacity.

The proposal came just a day after it revealed a plan to raise its production capability by 50 percent next year.

LG, also South Korea’s top home appliance maker, expects the global plasma screen market to more than triple by 2010, to 25 million units.

On Saturday, in a filing to the Korea Exchange, the company said it plans to build a new plasma display production line with a capacity of 180,000 units per month in the second half of 2006, boosting total capacity to 550,000 units per month.

Sunday’s statement outlined continued aggressive expansion.

“We are considering another investment in 2007,” LG said in a statement. “If the investment is made, we will be able to process 730,000 units per month, on top of the 550,000 units of per month capacity we will have by 2006.” “We don’t have to build a separate plant for the additional line; (we) only need equipment,” an LG spokesman said by telephone. “However, the investment size has not been finalized.”

LG denied local media reports that the additional line in 2006 could cost 200 billion won ($192.5 million) to build.

LG’s existing production lines have the capacity to process 370,000 units per month, though the latest line has yet to adopt a new technology that would enable it to operate at a full capacity.

With the investment plan, LG said it aimed to become the world’s biggest maker of plasma displays next year. It competes with South Korea’s Samsung SDI, the world’s top plasma display maker, and third-ranked Matsushita Electric Industrial of Japan, as well as Fujitsu Hitachi Plasma Display.

Another Japanese producer, Pioneer, shut down two of its six production lines for plasma displays in October, and according to a report in Sunday’s Nihon Keizai Shimbun newspaper, the company will likely reduce capacity further as part of a wider cutback plan. But LG is upbeat about its future in the industry.

“The market for large TV sets is growing fast, and digital broadcasting is becoming a global trend,” LG said. “We will strengthen our position in large flat TV markets through cost competitiveness and a technology lead.”

Separately, the company plans to set up a module plant in Europe next year and possibly another one in Americas later, the spokesman said, without elaborating.

The plants cannot produce panels and can only assemble plasma display modules.

Plasma screen makers are set to benefit from stabilizing panel prices as consumers are more drawn toward lower-price plasma televisions, which boast large screens and vivid colors, analysts said.

LG is also the world’s fourth-biggest mobile-phone maker and the top producer of air conditioners. LG and Royal Philips Electronics jointly operate LG Philips LCD, a flat-screen maker based on the liquid crystal display, or LCD, technology.

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