The investment will take place over the next ten years, according to reports in mid-March. LG Philips is a joint venture between Philips Electronics of the Netherlands and LG Electronics Inc. of South Korea. In the race to dominate the flat-panel market, the partners are going head-to-head against Samsung Electronics, which is investing a similar amount, $17 billion over seven years on new facilities to build liquid-crystal displays (LCDs) for use in all types of consumer gear.
The announcement was made as LG Philips neared completion on its sixth flat-panel plant in the central South Korean city of Gumi and broke ground on the company's seventh LCD-panel factory in Paju. The new plant should begin production of 42" and larger displays for TV sets in the first half of 2006.
South Korean companies control approximately half the global market for LCDs, according to industry statistics. The market—both wholesale and retail—for flat panels, especially LCDs, continues to heat up. On March 17, Austin, TX-based research firm DisplaySearch reported that industry revenues for "large-Area LCD" panels rose 101% during the last quarter of 2003, with even faster growth expected in the first quarter of 2004. LCD production was up 61% year-over-year, with 30 million units shipped, a level that was also a 12% increase from the previous quarter. Suppliers were "working round the clock to meet demand and finding innovative ways to stretch capacity," researchers confirmed, noting that there was "stronger than expected demand growth from the notebook PC, LCD monitor, and LCD TV markets."
LCD TV module shipments showed phenomenally fast growth, Q/Q growth as expected, rising 56% quarter-over-quarter and 245% year-over-year, hitting a record 2.05 million units. 20" and larger LCD TV panels rose from 49% to 53%, with 20" panels overtaking 15" XGA units as the most popular products. At the end of 2003, LG Philips owned 23% of the market for LCD screens larger than 10", with Samsung next with 22%. Other market leaders are Taiwan's AU Optronics Corp., Chunghwa Picture Tubes Ltd. and Chi Mei Optoelectronics Corp., followed by Sharp Corp. of Japan, the leading maker of LCD TV sets.
Sharp recently announced impending delivery of its new Aquos LC-15L1U. With a suggested retail price of around $1800, the 15" unit is claimed to be "the world's first wireless flat-panel television," bundled with a transmitter/receiver that allows use of any source—DVD, cable, satellite—without the need for connecting cables anywhere within the home. The upscale portable is a harbinger for all types of flat-panel TVs to come. "World-wide sales of LCD-based TV sets are expected to grow at a combined annual rate of 74% through 2007, when they will account for 14% of overall TV sales," read a report from iSuppli Corp., a research firm based in El Segundo, Calif.
News about exploding demand for LCDs was accompanied by an announcement from Thomson that it would be closing its CRT picture tube plant in Marion, IN. Approximately 1000 workers at the 50-year-old Marion plant will be let go, as will 545 at a related glass plant in Circleville, OH. The Marion plant was the site of a fire that broke out Tuesday, March 16, about four hours after the plant's closing was announced. Cause was arson, according to the Indianapolis Star, with damage estimated at $750,000.
"From 2000 to 2006 we are expecting a 40% decline in the picture-tube business in North America," said a Thomson spokesperson. "That works out to about 11 million fewer units over that six-year period. This is a reflection of a change in consumer taste. People are going for different display technologies, including plasma, LCD and digital rear projection." Workers dismissed from the CRT plant would receive severance pay amounting to three months' wages, Thomson officials stated.