Asahi Glass Co, Japan's largest glassmaker, will build a plant in central Japan to meet rising demand for material for large liquid crystal displays (LCDs).
The Tokyo-based company will invest ?14 billion (US$127 million) and increase its annual glass production capacity 22 percent to 22 million square meter, the company said in a press release.
The new plant will make the glass sheets used in flat panel television and computer displays beginning in October 2005.
Asahi Glass projects demand for LCD panels will grow 25 percent over the next few years.
"The demand for large glass sheets will continue to exceed supply as most manufacturers start production next year," said Yoshihiko Saito, an Asahi Glass spokesman.
Asahi Glass raised its net income forecast this month 7 percent to ?73 billion for the business year ending Dec. 31.
South Korea's Samsung Electronics Co and Japan's Sony Corp, the world's second-largest consumer electronics maker, teamed up last month to build a seventh-generation display plant that is to start production next year.
Matsushita Electric Industrial Co, Hitachi Ltd, and Toshiba Corp, three of Japan's biggest electronics makers, are also in talks on joint manufacture of liquid crystal displays used in televisions to compete with their South Korean and Taiwanese rivals.
Global supply of liquid crystal displays for computers and televisions exceeded demand in the first half, El Segundo, California-based Isuppli Corp said in a quarterly report this month. Oversupply will widen to 9.3 percent in the third quarter as eight new plants come on line this year, Isuppli said.
Global sales of liquid crystal displays will increase 50 percent this year, less than forecast, because rising inventories are cutting the prices of flat televisions and computer monitors, the Austin, Texas-based market research company DisplaySearch said.
Global sales of LCDs measuring more than 10 inches diagonally will rise to US$36 billion, down from a prior prediction of US$41.3 billion this year, DisplaySearch said at its conference in Los Angeles. The industry had sales last year of US$24 billion.
Shares of LCD makers, such as the world's largest Samsung, have fallen in the past four months as investors worry that growth won't be as fast as expected. DisplaySearch said a 17-inch monitor that sold for US$459 to consumers in the second quarter could fall as low as US$299 to US$349 by this holiday season in the US.
"We did see dramatic price reductions in July and August," said Ross Young, chief executive of DisplaySearch. "The outlook is fairly grim for rest of year."
Prices for LCDs had increased because of shortages. That led manufacturers to increase inventories quickly, Young said. The buildup will cause manufacturers to cut back, and LCD shipments this year will increase to 136 million units, less than a prior forecast of 140.5 million units, DisplaySearch said.
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