Samsung-Sony Venture Adds LCD Capacity despite IT Slump

Posted by: Moon Ihlwan on June 02

A liquid-crystal display (LCD) joint venture between Samsung Electronics and Sony held a ceremony on June 2 to mark the start of volume production at its new factory aimed at churning out big TV screens. The new plant is expected to delay the recovery of LCD panel prices that fall below manufacturing costs for most players.

Sure, the venture, called S-LCD, is running near full capacity. And analysts say it could even generate small profits in its TV panel operation by now, but no LCD panel producer was in the black in the first three months of this year. “Only top players could turn into profit in the third quarter if they are lucky,” says Lee Hak Moo, display analyst at Mirae Asset Securities. “The whole industry is still suffering from low prices and the addition of any new capacity could further slow down an industry recovery.”

The $1.5 billion factory is S-LCD’s second so-called eighth-generation facility designed to produce TV panels bigger than 46 inches. Officials at Samsung and Sony, the world’s No. 1 and No. 2 flat-panel TV brand respectively, have said they are determined to keep their leadership in digital TVs. By the end of this year, the joint venture plans to make 70,000 glass sheets every month. From each glass sheet, which is 2.5 meters long and 2.2 meters wide, the plant can make six 52-in. panels or eight 46-in. panels.

Amid the global recession, sales of flat-panel TVs have remained robust partly because prices have plunged over the last two years. China’s policy of subsidizing TVs and other electronics purchases in rural areas has also boosted TV demand. Mirae Asset has revised its forecast for global TV sales this year to 125 million sets, up from an earlier projection of 120 million and the 2008 sales of 105 million.

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