LG to launch flat panel TV drive

LG is struggling to compete against top players such as Sony, Samsung, Matsushita and Sharp because of its low brand value and high cost structure. But it wants to increase its share of the global liquid crystal display (LCD) market from 9 per cent to 12 per cent this year by doubling LCD television sales to 14m.

The company aims to raise its plasma display panel (PDP) market share from 20 per cent to 22 per cent by increasing PDP television shipments by 50 per cent to 3m units.

LG said its display division broke even in the fourth quarter on rising demand, although its plasma business remained in the red.

The struggling plasma business has dragged down earnings of the South Korean company, although its mobile phone and home appliance divisions have performed well.

Simon Kang, LG’s vice-president in charge of the display business, forecast that the plasma business would become profitable in the first quarter.

“We have reached a break-even point in the display business, which is encouraging,” he said in an interview with the Financial Times. “And we see no reason for PDP restructuring any more as the business is now operating at full capacity.”

Flat panel TV makers are locked in a price war as supply growth continues to outpace demand increase and PDP makers are under more pressure as the technology loses ground to rival LCD in the crucial 40in market.

Mr Kang said design would be vital in overtaking rivals. “We should put priority on product leadership to survive in this industry. Design will be a critical factor and we are looking for ‘plus alpha’ to attract consumers.”

He is pinning high hopes on LG’s new products such as LG60 and PG60, which boast innovative features such as intelligent sensor and wireless networking, with minimalist designs.

LG did not plan to increase its PDP capacity, Mr Kang said but would focus on improving productivity while cutting costs.

The company is to invest about Won250bn ($266m) in the display business this year, similar to last year’s level of investment. “The battle should be more about demand creation rather than capacity increase,” Mr Kang said.

He expects demand to be boosted by events such as the Beijing Olympics and the European football championships, which are likely to outweigh the negative effects of the US subprime mortgage crisis.

However, Mr Kang forecast that the industry would see the prices of large LCD screens fall because of increased volumes while the price declines of small ones would be modest amid supply shortages.

Analysts said LG faced a big challenge in a tough environment. James Kim, an analyst at Lehman Brothers, said: “It won’t be easy for LG to steal market shares from bigger rivals, unless it comes up with big hits, which could substantially raise its brand value.”-LG electronics