SEOUL (Reuters) - South Korea’s LG Display Co Ltd said on Wednesday it was considering building an additional production line to meet robust flat panel orders, adding to emerging concerns over rapid supply growth.
The liquid crystal display (LCD) industry is enjoying brisk demand for flat-screen TVs helped by Chinese holidays and sports events such as the Winter Olympics.
But concerns have grown recently that the sector might return to being oversupplied as makers aggressively beef up output. LG is set to begin operation of a separate production line in the first half while Taiwanese rivals, including AU Optronics, are increasing factory utilization.
Controlling supply is key for makers to maintain profits in the cyclical LCD industry.
“Although demand is strong, growing capacity will become increasingly burdensome for the industry,” said Jason Kang, an analyst at NH Investment & Securities. “Supply is already growing and the growth will be faster next year.”
Shares in LG Display, the world’s second-biggest LCD panel maker behind Samsung Electronics Co Ltd, fell 3.8 percent, lagging the wider market’s 1 percent loss. Samsung shares fell 2 percent.
“We are considering increasing capacity because we have been unable to meet all client demand for some time,” said an LG Display spokesman. “But nothing has been decided yet.”
Chief Financial Officer James Jeong told investors last month LG Display was meeting less than 90 percent of orders received and the situation would likely continue for several more months.
Samsung and LG Display are also seeking to build new factories in China to capitalize on the fast-growing market there.
Reporting by Rhee So-eui; Editing by Jacqueline Wong