The LG. Philips LCD Co. said Sunday it would carry out a large-scale capital increase for its Chinese affiliate to generate funds for production expansion.
The world's largest maker of liquid crystal display (LCD) screens said that its board of directors approved
the measure in a meeting on Thursday.
LG.Philips said the step is in anticipation of a recovery in the global LCD market, as well as growing demand
in China, where economic growth is brisk.
It said that the capital increase will permit the Chinese affiliate to receive 25.4 billion won (US$24.1
million) to raise the company's capital holdings to above 100 billion won from 91 billion won at present.
LG.Philips LCD holds a 100 percent stake in its Chinese affiliate in Nanjing.
At present, the plant can churn out 1.5 million to 2 million LCD modules a month if the assembly lines are run
at full capacity.
The company said the new funds are expected to allow several more assembly lines to be built so that annual
output can reach 24 million by year's end.
LG.Philips LCD has begun installing thin film transistor-liquid crystal display (TFT-LCD) equipment at the seventh-generation plant P7 in the Paju Display Cluster in Kyonggi Province.
LG.Philips LCD said the establishment of the Paju Display Cluster, which broke ground in March 2004, is progressing well. The LCD maker plans to launch commercial operation of P7 in the first half of next year.
P7 will produce 1,950 by 2,250 millimeter glass substrates, the biggest glass substrate used so far for TFT-LCD production. The new substrate size is suitable for the production of 42-inch and 47-inch wide liquid crystal display panels.
The establishment of LG.Philips LCD's display cluster in Paju is expected to create employment opportunities and invigorate nearby LCD industry-related businesses, such as component and equipment makers and material suppliers.
The company also said it is considering building an LCD module plant in Eastern Europe as part of its global
strategy to localize production and better serve the needs of customers.
LG Philips returned to profit in the second quarter of the year after a loss in the first even if earnings were down sharply on a year ago.
It said net profit income stood at 41 billion won (39.1 million dollars) in the three months to June, down from 701 billion won a year ago but reversing a three months to March net loss of 79 billion won.
Second-quarter operating profit fell to 29 bilion won from 771 billion won a year ago while sales declined one percent to 2.31 trillion won.
The company's results were above market expectations and marked a major turnaround from an operating loss of 135 billion won in the first quarter.