LG Philips bets on growing demand for large LCD TVs

Iran Materials 16 November 2006 18:18 (UTC +04:00)

(AFP) - LG Philips is betting on growing demand for flat screen televisions to cement its status as one of the world's largest liquid crystal display (LCD) manufacturers, reports Trend.

The company opened a new plant in January to produce 42-inch and 47-inch (107-119 cm) panels for televisions and computer monitors at a high-tech industrial complex 40 kilometers (25 miles) north of Seoul.

The sleek "seventh-generation" plant cost 5.3 trillion won (5.65 billion dollars).

LG Philips officials were bullish about the outlook, saying demand for large LCD televisions was soaring as consumers abandoned their bulky cathode ray tube sets.

"The LCD TV market has been growing fast," vice president Lee Bang-Soo said Wednesday during a press tour of the plant.

"LCD televisions will dominate the global TV market," he said, citing data from US market watcher iSupply -- which predicted LCD TVs would represent 51 percent of the global flat panel market in 2010, compared to 42 percent this year.

The LCD TV market would grow at an annual rate of 27.5 percent from 2005 to 2010, when it would be worth 84.3 billion dollars, and the share of large televisions in the LCD TV market would grow from 23 percent this year to 45 percent in 2010, iSupply said.

LG Philips has created a 100-inch LCD panel, listed by Guinness World Records 2007 as the world's largest.

The firm was created in 1999 as a joint venture between South Korea's LG Electronics and Royal Philips of the Netherlands. It became a separate entity in 2004.

The Paju plant is part of efforts to strengthen its position in a highly competitive world market. Its profits have been squeezed by a supply glut and weak prices as Taiwanese firms flood the market with lower-priced products.

LG Philips posted its worst net loss of 321 billion won in the third quarter of this year, compared with a profit of 227 billion won a year earlier, prompting an all-out drive to return to profitability and cut costs.

Lee conceded that South Korean and Taiwanese LCD makers were struggling with tight margins "due to fierce competition".

"Taiwan is nurturing the LCD industry as the next engine of growth," he said. "We still maintain our competitive edge in revenue and technology but they are catching up with us in terms of quantity."

Taiwan last year displaced South Korea as the world's top LCD producer in terms of shipments.

LG Philips also faces stiff competition from local rival Samsung Electronics, which has invested aggressively to secure a bigger market share and strengthen its price competitiveness.

Samsung opened a seventh-generation production line last year and in October broke ground for its next-generation joint venture with Sony to produce 50-inch panels.

LG Philips signed a strategic alliance with Toshiba last month, allowing the Japanese partner to buy a 19.9 percent stake in its Polish affiliate.

Lee said his firm was considering an eighth plant to make large panels but would watch the market situation before making a final decision.

The company planned to install a new line at Paju late next year, or in early 2008, for 5.5-generation panels for notebooks and monitors, which were now widely used.

"So far we have focused on expanding capacity to maintain our global leadership. But we revised our business paradigm, focusing on profitability," Lee said.

LG Philips hoped to return to the black after the third quarter of next year, he said, attributing its poor earnings to excessive investment.

"The 5.5-generation line will help improve our profitability," he said.