LG Elec may double plasma panel capacity by 2007

SEOUL (Reuters) - LG Electronics Inc, the world's number two maker of plasma display panels (PDP), said on Sunday it might add another production line in 2007, almost doubling existing capacity.

The proposal came just a day after it revealed a plan to raise its production capability by 50 percent next year.

LG Electronics, also South Korea's top home appliance maker, expects the global PDP market to more than treble by 2010 to 25 million units.

On Saturday, in a filing to the Korea Exchange, it said it would build a new PDP production line with capacity of 180,000 units per month in the second half of 2006, boosting total capacity to 550,000 units per month.

Sunday's statement outlined continued aggressive expansion.

"We are considering another investment in 2007," LG said in a press statement. "If the investment is made, we will be able to process 730,000 units per month, on top of the 550,000 units of per month capacity we will have by 2006."

"We don't have to build a separate plant for the additional line and only need equipment," an LG spokesman said by telephone. "However, the investment size has not been finalised."

LG denied local media reports that the additional line in 2006 could cost 200 billion won (US$193.5 million) to build.

LG's existing production lines have capacity to process 370,000 units per month, although the latest line has yet to adopt a new technology that would enable it to operate at a full capacity.

With the investment plan, LG said it aimed to become the world's biggest PDP maker next year. It competes with South Korea's Samsung SDI Co, the world's top PDP maker, and third-ranked Matsushita Electric Industrial Co Ltd of Japan, as well as Fujitsu Hitachi Plasma Display.

Another Japanese producer, Pioneer Corp, shut down two of its six production lines for plasma displays in October, and according to a report in Sunday's Nihon Keizai Shimbun, the firm will likely reduce capacity still further as part of a wider cutback plan.

But LG is upbeat about its future in the industry.

"The market for large TV sets is growing fast and digital broadcasting is becoming a global trend," LG said. "We will strengthen our position in large flat TV markets through cost competitiveness and a technology lead."

Separately, the company plans to set up a module plant in Europe next year and possibly another one in Americas later, the spokesman said, without elaborating.

The plants cannot produce panels and can only assemble PDP modules.

PDP makers are set to benefit from stabilising panel prices as consumers find lower-priced plasma televisions, which boast large screens and vivid colours, more attractive, analysts said.

LG is also the world's fourth-biggest mobile phone maker and top producer of air conditioners. LG and Dutch firm Philips NV jointly operate LG Philips LCD Co Ltd, a flat screen maker based on the liquid crystal display (LCD) technology.

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