Digital demand prompts surge in investment

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Sharp and Fujitsu have become the latest Japanese electronics groups to ramp up investment in capacity in an effort to meet surging demand for digital electronics products.

Sharp yesterday said it would invest Y200bn ($1.75bn) in additional capacity to increase production of liquid crystal display panels from 51,000 a month to 90,000 by the end of fiscal 2008.

Separately, Fujitsu announced it would invest Y120bn to build a new semiconductor plant to meet growing demand for its logic chips using advanced process technology.

Both groups are responding to strong demand for new digital products as global markets for flat panel TVs, mobile phones and portable audio players expand. Their announcements follow a similar move by Matsushita on Tuesday, which said it was investing Y180bn in a new plasma display panel plant to keep pace with demand.

Katsuhiko Machida, Sharp’s president, said the group would boost LCD panel production with the aim of increasing production of 32-inch LCD TVs from 5.76m units by this March to 20m by the end of 2008.

Mr Machida on Wednesday indicated that Sharp was suffering from a lack of LCD panels, which he said had hampered growth in the US market, where it faces severe competition from Sony.

Mr Machida emphasised that Sharp’s share of the TV market had fallen not because of a lack of demand but because it did not have enough panels.

“The point is that demand for LCDs is increasing much faster than expected and demand for larger TVs is growing much faster than expected and that is the lesson of 2005,” he said. “We believe that if we increase the supply of panels we can deal with [the fall in TV market share].”

Sharp, which is the only major Japanese manufacturer of LCD panels for TVs, expects global demand to surge from 20m units in 2005 to 36m units this year.

The group expects demand for its LCD TVs to surge 50 per cent from 4m this year to 6m in fiscal 2006.

Mr Machida has set a target of record revenues of Y3,000bn, against a forecast Y2,750bn this year.

Meanwhile, Fujitsu said its new semiconductor fabrication plant would become operational in fiscal 2007 and gradually increase capacity to a maximum of 25,000 wafers per month.

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