Matsushita, Hitachi LCD TV to invest $713 mln

Tokyo, May 31 : A liquid crystal display venture between Hitachi Ltd. and Matsushita Electric Industrial Co. said on Wednesday it will invest about 80 billion yen (2.9 million) to boost output amid growing LCD TV demand.

The venture, IPS Alpha Technology Ltd., in which Toshiba Corp.

also has a stake, said it will add a production line at its plant in Chiba, near Tokyo, doubling annual output capacity to 5 million units by the second half of the 2007/08 business year, ending in March 2008.

It also earmarked about 12 billion yen (7 million) to build a factory in the Czech Republic to keep up with the rapidly growing European flat-panel TV market. Operations are due to start in the second half of 2007/08.

Matsushita, the world's largest maker of plasma TVs and known for its Panasonic brand, and Hitachi, which is also a strong player in the plasma business, have been falling behind Sharp Corp. and Samsung Electronics Co. in building up their capacity to produce LCD panels.

In addition to the rollout of digital broadcasting, events of global interest such as the World Cup soccer tournament in Germany starting in June and the 2008 Beijing Summer Olympics are spurring a rapid increase in demand for flat-panel digital TVs, IPS Alpha said in a statement.

According to DisplaySearch, demand for LCD panels for TVs is projected to jump more than threefold over the next three years, and rival makers including Sharp and a joint venture between Samsung and Sony Corp., have recently announced large investments to boost output.

Shares in Hitachi fell 2.46 percent to 754 yen in afternoon trade, while Matsushita slipped 1.81 percent to 2,445 yen, both dragged down by the broader market. The benchmark Nikkei average was down 1.9 percent.

A spokesman at IPS Alpha said the venture would raise 30 billion yen by issuing new shares to Matsushita and Hitachi, both taking half. After the additional investment, the venture will be owned 50 percent by Hitachi, 30 percent by Matsushita and 15 percent by Toshiba. The remainder will go to a bank and other investors.

IPS Alpha started production this month with an annual output capacity of 32-inch panels at 1.6 million units and plans to expand it to 2.5 million units by January 2007, bringing forward the expansion by three months from its initial schedule.

Hitachi ranked No.9 in global LCD panel shipments in the January-March quarter with 0.5 percent, falling far behind top makers such as LG.Philips LCD Co. and Taiwan's Chi Mei Optoelectronics Corp., DisplaySearch data showed.

Reuters