Seiko Epson Corp, the world's biggest maker of color screens for cellular phones, will increase production capacity to meet growing demand, executive vice president Toshio Kimura said in an interview.
The company, based in Nagano prefecture, northwest of Tokyo, will invest as much as ¥5 billion (US$45 million) at its factories overseas to raise capacity to 12 million to 13 million units a month as early as this summer, up from 10 million units, Kimura said.
The industry sold 520 million cellphones last year, a 21 percent increase from 2002, according to researcher Gartner Inc.
Demand was driven by markets such as India and by consumers in the US and Europe who bought new phone models with color screens and cameras. Phone unit sales may increase 12 percent to 580 million handsets this year, Gartner said.
"Electronic devices will be the driving force for sales and profit at Seiko Epson in the short term," said Hiroyasu Sato, an analyst at Daiwa Institute of Research who rated Seiko Epson "outperform" on Friday.
The ratio of cellphones with color screens may rise to over 70 percent next fiscal year starting April 1, from about 55 percent this fiscal year, said Kimura.
"Demand in color screens is growing faster than we had originally expected, especially in Asia and in Europe," he said.
Seiko Epson shares rose 2 percent to ¥4,000 as of 1pm yesterday in trading on the Tokyo Stock Exchange.
Seiko Epson will also increase investment in panels used for LCD projectors, or high-temperature polysilicon thin-film transistor (HTPS TFT) panels, as demand is growing rapidly, particularly for use in rear-projection TVs. These HTPS TFT panels are small screens that allow light to pass through. An image created on them is magnified then projected on to a larger screen. Seiko Epson is the world's biggest maker of LCD panels for projectors and rear-projection TVs.
The company, which makes HTPS TFT panels at its Suwa Minami plant in Nagano prefecture, will begin mass production at its Chitose Plant in Hokkaido in the spring of 2005. Seiko Epson began mass production of HTPS panels in 1994.
Rear-projection TVs are used in home-theater systems and their popularity is expected to increase with the spread of digital broadcasting and the use of DVD players, Seiko Epson said.
The company announced in August last year it will invest ¥20.7 billion on its Chitose plant in the fiscal year starting April 1.
"We will make additional investments on this depending on the market trends," Kimura said, without saying how much additional investments will be made.
Tokyo-based Sony Corp, the second biggest maker of LCDs for projectors, has decided to terminate sales outside the company because of harder price competition, and users of the panels will probably turn to Seiko Epson for their supply needs, Daiwa's Sato said.
Total investment by Seiko Epson on electronic devices and components including LCDs will be ¥24.4 billion in the fiscal year ending March 31.
Investments on electronic devices will more than double next fiscal year because of the investments on HTPS TFT panels and color LCD panels for cellphones. Investments on information-related products such as printers will be about the same as this fiscal year's ¥36 billion, Kimura said.