Sharp Corp said its newest liquid-crystal display plant is operating at full capacity a month ahead of schedule, churning out large-sized flat panels to meet growing demand from personal computer makers.
Japan's largest maker of LCDs expected the plant in western Japan's Mie prefecture to be using all of its capacity this month.
Instead, the factory reached that level in February as notebook PC and monitor makers began asking for more flat screens, spokesman Heihachiro Ochiai said in an interview.
An increase in demand may mean higher prices for one of the key components in PCs just as the industry begins to get back on its feet. While Sharp expects that by next month the prices of some flat panels will increase by a third from last year, some investors aren't convinced because rising parts prices may sour demand for PCs.
"It's hard to conceive that LCD prices will keep rising," said Nobuaki Murayama, who helps manage ?60 billion (US$451 million) in Japanese equities at Cigna International Investment Advisors Co. "The current PC demand has been driven by lower prices, not necessarily by real consumer demand."
Murayama isn't willing to buy Sharp shares, he said.
Large-sized LCD prices fell by more than half in the two years ended December after South Korean and Taiwanese manufacturers raised production, making the panels more affordable to consumers and boosting demand from PC and monitor makers.
By next month, the price of a flat panel measuring 15 inches diagonally will probably reach US$260, compared with about US$200 late last year, Sharp's Ochiai said. The recovery in prices may eventually hurt demand, he said.
"We expect prices to stabilize after reaching between US$260 and US$270," Ochiai said. "If they rise further, the gains may be reflected in monitor prices, curbing demand for the devices."
LCD makers typically make a profit at US$240 for a display measuring 15 inches diagonally, Ochiai said.
Sharp estimates the industry will ship more than 25 million flat-panel monitors this year, up from about 15 million units a year ago.
Higher LCD costs already prompted some computer makers to raise prices. Apple Computer Inc., which in January introduced a remodeled iMac personal computer with a flat-panel monitor, last week raised the price on each of its three iMac models because of rising component costs.
Besides computers, Sharp-made LCDs are used in television sets, hand-held computers and Nintendo Co's portable game machines. The company produces large-sized panels at its second plant in Mie Prefecture and small displays at other factories.
The LCD plant in Mie has monthly production capacity of 90,000 sheets measuring 680mm by 880mm. Sharp plans to boost capacity to 100,000 sheets as early as October.
To deal with a possible supply shortage, Sharp plans to take advantage of a venture with Taiwan's Quanta Computer Inc to produce PC displays. Sharp will be able to get some of the displays made by the venture for notebook computer makers.