LG Display Co's new capital expenditure plan to expand its 6th generation plant capacity is not expected to make a significant impact on the overall liquid-crystal-display (LCD) industry, a researcher said yesterday.
During an analyst meeting held in Seoul on Thursday, LG Display chief executive officer Kwon Young-soo addressed a number of concerns about the company and the industry, and unveiled a plan to invest 1 trillion won (US$957.4 million) to build a production line for monitor and notebook LCDs, ㄍwire agency reports quoted company spokesman Park Sang-bae as saying.
The plan will allow LG Display — the world’s second-largest LCD maker — to expand its monthly production capacity at its plant in Gumi by 60,000 panels to 230,000 in the first half of next year, wire agency reports said.
GOOD TIMING
“We do not think LG Display’s expansion will have adverse impact on the overall LCD industry,” said David Hsieh (謝勤益), a vice president of market researcher DisplaySearch in Taipei. “The timing is quite good.”
LG Display’s new production is set to come out in the second half of next year, when DisplaySearch expects supply would be constrained in the traditional peak season, Hsieh said.
No other LCD panel makers has plans to build more G6 factories in the foreseeable future, he said.
Citi Investment Research analyst Jonathan Rhee said in a client note yesterday that LG Display’s plan would heighten the possibility of oversupply next year.
But he said the oversupply risk should be manageable because of better LCD demand “driven by increased price elasticity” and “new demand from small to medium-sized TV, notebook PC and LED notebook PC” next year.
LG Display plans to primarily make LCD monitor screens for small-sized TVs such as 19-inch and 22-inch TVs at its new G6 production line, Hsieh said.
Shipments of LCD monitor panels used in LCD TVs are expected to almost double to 13 million units this year and 15 million units next year, from 7 million last year, DisplaySearch said.
Meanwhile, LG Display shares fell the most in two months, leading declines in liquid-crystal display makers in Asia, after Lehman Brothers Holdings Inc and Macquarie Group Ltd reduced their ratings on the stock.
SHARES FALL
LG Display fell 8.3 percent to close at 46,400 won in Seoul, the biggest drop since March 13.
Samsung Electronics Co, the industry leader, and AU Optronics Corp (友達光電) also declined.
Lehman Brothers cut its recommendation on LG Display to “equal-weight” while Macquarie lowered the rating to “neutral” because of a drop in demand from TV clients.
Macquarie and Lehman reduced their ratings from “outperform” and “overweight” respectively, the firms said in separate reports on Thursday.
Lehman also cut its rating on the display industry to “neutral” from “positive,” and reduced AU Optronics and Chi Mei Optoelectronics Corp (奇美電子) to “equal-weight” from “overweight.”
“Weak panel pricing, especially for TV panels, combined with industry-wide oversupply lasting through to first half of 2009, should make the LCD industry relatively less attractive,” James Kim, an analyst in Seoul, wrote in Lehman’s report.
Samsung shares dropped 0.5 percent to 760,000 won in Seoul trading.
AU Optronics fell 1.8 percent to NT$60.30 and Chi Mei declined 0.9 percent to NT$43.10 on the Taiwan Stock Exchange.
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