July 15, 2004 12:36 PM PDT

Sony, Samsung complete LCD plant

Sony and Samsung on Thursday said they finished building a major plant for making LCD panels, which are going into a growing number of televisions.

S-LCD, the joint venture formed by the two consumer electronics giants, said it completed an LCD (liquid crystal display) manufacturing facility in Tangjung, South Korea, and that mass production of the panels is slated to begin in the first half of next year. The plant is designed to churn out 60,000 panels a month.

"Television is a key product category for Sony," Ken Kutaragi, executive deputy president of Sony, said in a statement. "S-LCD panels will be at the core of our flat-panel TV strategy, further strengthening our overall vision for television."

LCD technology allows for thinner and lighter televisions and monitors than traditional cathode-ray tube products. The market for LCD televisions is particularly promising, according to research firm iSuppli. The share of worldwide TV shipments that are LCD models will grow from 5 percent this year to 18 percent in 2008, iSuppli said. The total TV market is expected to jump from about 168 million units to roughly 203 million units during that period.

Overall, the LCD market can be uneven. Unit sales to customers of LCD monitors for desktop and workstation computers dropped in the first quarter compared with the fourth quarter of 2003, iSuppli said. LCD panels were in short supply last year, and prices rose for LCD monitors.

The new S-LCD plant is optimized for big panels that can fit into televisions, said iSuppli analyst Riddhi Patel. "It's going to make the large-size LCDs available at a more reasonable rate," she said. Partly because of the new factory, the average price for LCD televisions that are 40 inches or larger should fall from about $8,000 to $1,500 by 2008, Patel said.

Sony and Samsung are vying with other LCD panel manufacturers such as LG.Philips LCD, a joint venture between Royal Philips Electronics of the Netherlands and Korea's LG Electronics. LG Philips is poised to make an initial public offering.

LCD technology is competing against plasma display technology, which also allows for thin televisions. Other display methods are emerging, including so-called liquid crystal on silicon rear-projection technology, which has been championed by chip giant Intel.

Sony and Samsung inked their joint venture in April, with each company contributing roughly half of $1.8 billion in capital. The deal, which places a Samsung executive as the CEO of the joint venture, is a sign of Samsung's growing strength and Korea's arrival as a tech powerhouse.

Japan's Sony, meanwhile, had fallen behind in flat-panel technology, because it lacked production facilities for plasma or LCD panels, Patel said.

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