Sharp to speed up LCD factory expansion

Sharp will invest Ľ15 billion (US$131 million) to expand production at its Kameyama No.1 factory from the current 51,000 glass sheets per month to 60,000 sheets per month by March 2006. Each sheet can be used to make several LCD panels.

The No.1 plant can handle so-called sixth-generation glass, which measures 1.5 meters by 1.8 meters, and is most cost-effective when used to make 30-inch class panels.

The company's second plant in Kameyama, west Japan, is currently under construction and due to begin operations in October this year. It will be able to handle larger eight-generation glass that measures 2.16 meters by 2.4 meters and can accommodate eight 45-inch or six 50-inch LCD displays. The plant will start with a capacity of 15,000 sheets per month. Sharp had previously said it would expand this to 30,000 panels per month by the end of 2007 although this is now expected to be completed by March 2007.

Taken together, the expansion should mean the two factories will be able to process up to 90,000 glass sheets per month when they hit full capacity. This is equivalent to 20 million panels for 32-inch televisions per year, assuming maximum yield, said Katsuhiko Machida, president of Sharp, at a Tokyo news conference.

Behind the faster than anticipated expansion is surging demand for flat-panel televisions and competition in the LCD market between Sharp and other manufacturers and wider competition between LCD and PDP (plasma display panel) manufacturers.

Sharp estimates 20 million LCD televisions of screen size 10-inches or above were shipped worldwide in 2005, up 123 percent on 2004, and that the market will grow by 80 percent this year to 36 million television sets. In contrast, the company sees PDP shipments in 2006 at 7.5 million, rear-projection TV shipments at 5.5 million and old-fashioned CRT (cathode ray tube) sets at 123 million units.

While LCD is outpacing PDP, competition is fierce around big-ticket 40-inch class televisions where the two technologies overlap.

On Tuesday, Matsushita PDP Company Ltd., a joint venture between Matsushita Electric Industrial Co. Ltd. (Panasonic) and Toray Industries Inc., announced plans for its fourth PDP plant. The Ľ180 billion plant will have a production capacity of 6 million panels per year, based on full yield and a 42-inch screen size.

Within the LCD market, there is also fierce competition between Sharp and competitors including Samsung Electronics Co. Ltd. and LG.Philips LCD Co. Ltd. Last week both companies opened new production lines in South Korea that are focused on 40-inch and 46-inch screens. Both will be able to process up to 45,000 sheets of mother glass per month when they reach full output.

Sharp has set a record net sales target of Ľ3 trillion in its 2006 fiscal year, which runs from April 2006 to March 2007, said Machida. The company expects to sell 6 million LCD TVs during the year, up from 4 million in the current fiscal year, he said.