SEOUL, 29 Aug. (Reuters/EP) -
Flat panel maker LG Display will cut investment spending for next year by a third, as rising sales of mobile devices such as the iPad or Android smartphones weaken demand for TVs, its main source of profit.
Mired in overcapacity for more than a year, the outlook has worsened for the global liquid crystal display (LCD) sector, damaging Samsung Electronics and LG Display, which together account for half of the global market.
The downsizing of LG Display, the first major tech company to announce a plan to drastically reduce investment by 2012, will lead to the company's lowest capital expenditure in four years.
TV makers are facing sluggish demand, which has forced Sony to cut its exposure in the TV screen business, as has Samsung and Sharp, while Philips has spun off its loss-making TV unit.
"LCD makers will maintain a conservative investment plan for 2012 and LG will likely also cut spending again, while visibility is very low on weak demand, especially in Europe and the United States," John Soh, an analyst at Shinhan Investment & Securities, said Monday.
"LG will likely report that its losses will increase in the current quarter and the outlook for the next nine months is horrific due to weak demand for computers and TVs," he added.
That weak demand is a major concern for LCD display manufacturers as both products account for nearly 90 percent of large flat panels.
LG Display's smaller rivals, such as Taiwan's AU Optronics and Chimei Innolux, have cut investment spending for this year.
LG Display, a major supplier of displays for the iPad and iPhone, has ramped up sales of tablet screens and e-books to try to recover from weak demand for TVs and computer screens.
Earlier this month, a news report said LG Electronics, the world's second-largest TV maker, had cut its sales target this year by 20 percent, joining Sony in weak sales projections in the face of uncertain global economic prospects.
"We are studying investment spending of 3 trillion won (about 1.93 billion euros) for next year and have no plans to build a new factory," an LG Display spokesman said, confirming comments made by its chief executive to a local media outlet in an interview.
Authors: PortalTIC.es / Companies
