LG Philips LCD Co, the world's second-largest maker of liquid crystal displays (LCDs), may delay the production schedule of its newest plant because of defective screen-making equipment supplied by Japan's Canon Inc.
The Seoul-based company's P6 plant may not reach its target of processing 90,000 sheets of glass a month until the fourth quarter next year, compared with its previously estimated third-quarter schedule, LG Philips said in an e-mailed statement.
Canon expects to resolve problems with its MPA-8000 series stepper in three to four months, spokesman Hiroshi Yoshinaga said.
Industry leader Samsung Electronics Co and Chi Mei Optoelectronics Corp (奇美電子) may be most vulnerable to the Canon defects. Still, delays may help the industry because they could ease LCD oversupply, said Merrill Lynch & Co.
"The Canon situation will probably help boost investor sentiment for LCDs in the short-term because it can help ease oversupply by a little bit, not a great deal," said Kim Hyun-tae, who manages the equivalent of US$430 million at Woori Investment Trust Management Co in Seoul.
"In the long term, investors need to see good signs about demand, especially for LCD televisions, for these stocks to look attractive," Kim said.
Suwon-based Samsung's newest LCD plant will get all of its steppers from Tokyo-based Canon, while Chi Mei's plant, that is due for mass production in the first quarter of next year, will buy 80 percent of the scanners from Canon, according to the Merrill Lynch report.
LG Philips LCD's P6 plant gets 25 percent of its steppers from Canon, according to the report.
Samsung Electronics spokeswoman Cho Sung-in said the company expects to begin production during the first quarter of next year. The company said when it reported earnings last month that it planned to begin production in February.
AU Optronics Corp (友達光電), the world's third-largest LCD maker, doesn't expect to delay the start of production at its newest flat-panel plant because of Canon, spokeswoman Yawen Hsiao (蕭雅文) said.
The company has asked Canon to report on how AU Optronics's production plans may be affected, she said. One third of the company's steppers for the plant will come from Canon, according to Merrill Lynch.