LCD Makers' Increased Capacity May Stifle Recovery

The rush by Asian liquid-crystal-display makers to ramp up production at home and to invest in new plants threatens to curtail the nascent recovery in the flat-panel market.

LCD makers in Asia have just started to see their earnings recover in the second quarter after prices began to rise thanks to production cuts made last year, component shortages and strong demand from China. But another supply glut could be looming as soon as the current quarter as companies such as Sharp Corp., Samsung Electronics Co., LG Display Co. and AU Optronics Corp. ramp up production from new lines.

“With the glass shortage diminishing in Taiwan, and [eighth-generation plants] ramping up in Korea, supply is growing faster than demand,” said Paul Semenza, senior vice president at U.S. market research firm DisplaySearch.

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