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LCD glass suppliers increase manufacturing capacity

LCD glass suppliers are in a hurry to add extra manufacturing capacity in order to satisfy increasing demand for large displays, but analysts say that a shortage of capacity could still develop over t…

LCD glass suppliers are in a hurry to add extra manufacturing capacity in order to satisfy increasing demand for large displays, but analysts say that a shortage of capacity could still develop over the next few months and perhaps continue through 2004. Although the overall prospect for LCD materials is one of falling prices and excess stocks, a recent report by DisplaySearch Inc., Austin, Texas, forecasts that glass demand will be slightly higher than supply until the 4Q 2003. By that time, industry leader Corning Inc. is expected to bring additional processing tanks into operation. Corning provides more than 50% of the industry“s LCD glass capacity, according to DisplaySearch. Corning“s competitors are also increasing their manufacturing capacity. Japan“s Asahi Glass Co. Ltd., the second-largest glass supplier 25% of the market, is expected to up capacity in the 3Q, while several smaller suppliers, including Taiwan“s Picvue Electronics Ltd. and Germany“s Schott Group will do the same in early 2004. But the additional capacity may still not be sufficient, warned DisplaySearch analyst Ross Young. “If [sales of] TVs and monitors meet our forecast, there are potential shortages by the end of 2004,” he said. Although projections of glass shortages are a cause for concern among some LCD suppliers as they move toward making 20 inch and larger panels for desktop monitors and flat-panel LCD TVs, others are worried that current economic and political conditions could harm sales. “Never before has the LCD industry faced daunting obstacles like the [Iraq] war and [the weak] economy at the same time,” said Carl Steudle, vice president of marketing for San Jose-based LG.Philips LCD America Inc., the U.S. subsidiary of Korea“s LG.Philips LCD Co. Ltd. “Retail monitor sales are not compensating for a drop in corporate purchases,” he said. Moreover, LG.Philips expects no problems with supplies of glass or of LCD drivers and filters, according to Steudle. However, given the sharp cyclical changes of the LCD industry, neither display nor materials suppliers want to be caught out if demand meets or exceeds expectations. Though uncertainties remain about forecast demand, they believe that making multi million dollar investments in advanced fabs will yield higher margins from larger display panels which they will be able to produce at lower cost. To fulfill demand for larger substrates, Corning has begun sampling 1,500 x1,800mm glass for Generation 6 fabs that are now under construction by Sharp Corp. and other suppliers, and is developing even larger glass for Gen 7 fabs being planned by Korea“s Samsung Electronics Co. Ltd., said Corning spokesman Jim Terry. J.C. Lapp, a development associate for the Corning supplier, noted during a presentation at the recent DisplaySearch Flat Panel Display Conference in La Jolla, California, that a 25 inch LCD TV requires three times as much glass as a 15 inch monitor. But later-generation fabs will be able to fabricate more panels from a single substrate, improving economies of scale to reduce display production costs, Lapp said. For example, the materials cost for making a 15 inch LCD monitor panel, including glass, color filters, polarizers, driver ICs, and backlights, is expected to fall by about 10% per year until the end of 2006, according to DisplaySearch.

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