SEOUL, South Korea (AP) -- South Korea's LG Display Co. said Friday it plans to spend 1 trillion Korean won (US$960 million; euro620 million) to build a new liquid display production line.
LG Display, the world's second-largest LCD maker by sales after Samsung Electronics Co., plans to build a sixth-generation production line that will likely begin operations in the second quarter of 2009, the company said in a statement to South Korea's stock exchange.
But the announcement drove down the company's share price amid worries that the additional output will worsen an anticipated supply glut of the panels, used for TVs and computers.
''The LCD industry will experience oversupply from October this year,'' said James Kim, an analyst at Lehman Brothers.
Shares in LG Display fell 8.3 percent to 46,400 won.
The investment will help boost its 2008 capital expenditure to 3.6 trillion won (US$3.4 billion; euro2.2 billion) from an earlier guidance of 3 trillion, LG said.
LG Display's capital spending will then decline to about 1.8 trillion won in 2009 as demand for LCD panels slows down, said LG Display Chief Executive Kwon Young's at an analysts' meeting Thursday evening.
Kwon said the company is reducing TV panel output by switching some of its LCD lines to produce information technology panels -- for computer monitors and notebook screens -- because some of its TV panel clients are experiencing weakening demand.
The executive expressed confidence that by strengthening its technology panel business the company would withstand potential oversupply in 2009, citing that as a reason why it is adding the sixth-generation line.
But Kim at Lehman Brothers pointed out that Taiwanese LCD makers are also switching to IT panels, raising oversupply concerns.
LG Display's major TV panel customers include LG Electronics Inc., Philips Electronics NV of the Netherlands, Vizio Inc. and Toshiba Corp.
Analysts said LG Display's shares could fall further in coming weeks amid concerns that Philips Electronics will further sell down its stake in the Korean LCD maker from June 10, when a lockup period for its last sell down ends.
In March, the Dutch firm lowered its stake in LG Display to 13.2 percent from 19.9 percent as part of its strategy to unload its shareholding in overseas affiliates.
LG Display was formerly LG.Philips LCD Co. and changed its name in March after the share sale.
