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Thu, Feb 24, 2005 - Page 12 News List

Toshiba to increase LCD spending by ?22 billion

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Toshiba Corp, the second-biggest Japanese chipmaker, will raise capital spending by as much as ?22 billion (US$210 million) to increase output of displays used in mobile phones and car navigation systems.

"The investment will increase our spending plan for this business year," said Midori Suzuki, a spokeswoman for the Tokyo-based company.

The funds, to be used by a venture with Matsushita Electric Industrial Co, would bring Toshiba's capital spending to about ?376 billion for the year ending March 31, up from an initial plan for ?330 billion.

Earlier this week the company said it would boost investment in flash-memory chips by ?24 billion.

Toshiba is raising spending at a time when falling prices for devices and components have forced electronics makers to cut profit forecasts.

Toshiba Matsushita Display Technology Co said on Tuesday it will spend ?50 billion to build a plant in Ishikawa Prefecture to boost output of high-margin thin-film transistor LCD panels.

"Our high-quality screens give us more negotiating power compared to our rivals, but we too are affected by steep price declines," said Tsutomu Ochi, a spokesman for the venture.

Displays for portable DVD players, which the company no longer makes, are currently sold at half the price from the year-ago period.

"We can make them, but it doesn't make sense,"' Ochi said.

Toshiba, which owns 60 percent of the venture, will provide about ?30 billion of the ?50 billion factory investment, Ochi said.

About three-quarters, or ?22 billion, will be spent this fiscal year, and the rest next year, he said.

Toshiba Matsushita Display, set up in 2002, turned profitable on an operating basis in the second half of the fiscal year ended last March. The company expects an operating profit, or sales minus the cost of goods sold, selling and general administrative expenses, of ?13.5 billion this year.

Production at the new factory will begin in April next year, with the capacity to make 5.5 million panels measuring 2.2 inches diagonally a month, bringing the venture's monthly production to 10 million panels.

Toshiba on Feb. 21 said it will increase spending on its chip business by ?24 billion, or 13 percent, to raise production four-fold for flash-memory chips, which are used in products such as Apple Computer Inc's iPod Shuffle music player.

Shares of Toshiba, which have gained in each of the past two years, fell ?2 to ?444 as of 2:25pm on the Tokyo Stock Exchange.

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