Sharp Corp. will expand production capacity by more than 10 percent as next year's soccer World Cup and the Winter Olympics spur demand, executives involved in the plan said. The company plans to increase monthly capacity of glass sheets, which can be cut into eight 37-inch screens, to at least 56,000 as early as March, from 51,000 now, the executives said, declining to be identified before figures are finalized. Sharp forecast in August that it would process 54,000 sheets.
Sharp in October raised its estimate for the global market for the year ending March to 20 million LCD TVs from 15 million and President Katsuhiko Machida said the company faces "lost opportunities" because it can't produce panels fast enough. TV and screen producers such as Sharp and Samsung Electronics Co. are counting on next year's sporting events to increase sales.
"They need to have a certain level of production to stay competitive,'' said Naoki Fujiwara, who oversees about U.S. $180 million of Japanese equities as a fund manager at Shinkin Asset Management Co. in Tokyo. "Demand is strong and a 10 percent increase won't cause oversupply."
Asahi Glass Co., which is Sharp's second-biggest supplier of glass used in LCDs after Corning Inc., rose as much as 5 percent. LCD TVs currently make up about 6 percent of the flat-screen TV market, while plasma TV sets have a 71 percent share, according to industry researcher DisplaySearch. By 2009, half of the market will comprise of LCD TVs measuring 40 inches to 44 inches diagonally, the research firm said.
The company, which makes the Aquos brand of flat-screen TVs, will add a production line at its Kameyama factory in Mie prefecture, central Japan by the beginning of the fiscal year, the officials said, without saying how much it would spend. The factory was the world's first to build both panels and TV sets in the same facility. Fujiwara said Sharp's new production line may cost "several billion yen."
Sharp had an 18 percent market share of the world's LCD TV market for the quarter ended September, according to DisplaySearch. Global shipments rose 156 percent in the 3 months from a year earlier to a record 5.5 million units, according to the research firm. Prices of flat-screen TVs are falling at an annual rate of at least 20 percent, according to DisplaySearch.
The company in October had increased capacity at its Kameyama plant by 10 percent, without additional investments, by making changes to its production line. The new line will adopt more changes to improve production yield and reduce costs. "It's a smart move that they are using existing technology to increase output, which is less expensive," said Seiichiro Iwamoto, who manages about $9.7 billion in stocks at Fuji Investment Management in Tokyo. Iwamoto said Sharp will eventually raise capacity to more than 60,000 sheets. (Bloomberg)
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