The two already have a joint venture in this field. They formed S-LCD Corp in 2004, and now both companies have agreed to jointly invest $2bn so that S-LCD can build an eighth-generation production line, which will begin mass manufacturing in May 2007. The new LCD line will turn out 50,000 units a month. Last week Samsung also announced it would invest $750m on a new plasma panel production line that would boost its capacity by nearly 70%.
Suwon, South Korea-based Samsung is experiencing strong demand for its flat-panels. Over the past year it has witness huge consumer demand as users finally began moving away from bulky cathode-ray tube televisions and monitors, which for years offered far better picture quality at cheaper prices compared to flat panels. Now however flat panels are the more popular option, thanks in part to falling prices and improvements in the picture quality.
Samsung has invested heavily in flat panels over the years. It makes its own flat-panel televisions and is a major supplier of the liquid crystal displays used in other manufacturers’ TV sets as well as laptops and mobile phones. Sales of liquid crystal displays in the fourth quarter jumped 54% from the year before to KRW 3.01 trillion ($3.04bn).
Demand for large LCD panels used in PCs is expected to rise 50% over the next three years, while demand for LCD panels for TVs is projected to jump more than threefold, according to research firm DisplaySearch.
Samsung’s tie in with Sony will enable the Korean company to use the powerful brand name of the Japanese giant in order to expand the market for larger television panels. Sony will gain vital access to production capacity for its new line-up of its Bravia branded LCD TVs, which are increasingly popular in the US and Japan. Timely panel supply is a vital element in the fiercely competitive LCD market.
Rival suppliers such as LG Electronics Inc and Matsushita Electric Industrial Co have already announced aggressive plans to ramp up production in order meet the huge demand for plasma televisions. Matsushita said it would start production at its new $1.6bn plasma display plant next year after boosting capacity at its existing factory in July. Korean rival LG meanwhile is raising its PDP production capacity by 50% this year, and is likely to add another line by 2007.
