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January 11, 2007 12:24 am

Matsushita to build biggest plasma plant

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Matsushita said on Wednesday it would build the world’s biggest plasma display factory in western Japan for Y280bn, so increasing global competition for flat-panel televisions.

The plasma TV market leader with a 33 per cent share aims to compete with liquid crystal display TV makers, which are more popular with consumers. LCD makers, such as Sharp, are building larger panels with higher resolutions to compete with plasma TVs, leading to intense pricing pressure.

Matsushita’s new plant will have the capacity to produce 1m 42-inch TVs per month and will be the fifth domestic plasma display panel plant for the maker of the Panasonic brand. It is slated to begin operations from May 2009.

Koya Tabata, consumer electronics analyst at Credit Suisse, estimates that prices for flat-panel TVs have fallen by about 25 per cent due to the unexpectedly strong performance of large LCD TVs. However, global demand for 37-inch and larger TVs is expected to reach 50m units in fiscal 2010, from 8m units in fiscal 2006.

“Demand for flat-panel TVs will increase and the supply-demand balance will tighten,” said Mr Tabata. “Matsushita has enough cash and little debt so it will not have an impact on its balance sheet.”

According to DisplaySearch, the US research firm, demand for plasma TVs is expected to grow to 15.3m in 2009. That compares with a forecast of demand rising to 82.9m units for LCD TVs in that year.

As a result of intense cost-cutting, Matsushita halved its total debt over the past four years to Y603.9bn at the end of fiscal 2006. The company has ample liquidity, with cash and equivalents of Y1,667.4bn far exceeding total debt.

Under the new mid-term business plan unveiled on Wednesday, Matsushita said it would invest Y1,500bn in capital outlays and would spend Y1,800bn on research and development over the next three years.

Matsushita said it was aiming to achieve group sales of Y10,000bn in the fiscal year ending March 2010, compared with estimated sales of Y8,950bn for this fiscal year.

The Japanese company is also aiming to increase its operating profit margin to 8 per cent by March 2010, from 5 per cent this year.

Shares of Matsushita closed down 3.6 per cent at Y2,290, on concerns that a supply glut of plasma televisions could emerge as a result of the new factory, putting further pressure on prices.

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