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Supply of flat-panel displays to stay thin

A shortage of the monitors is expected to continue through the rest of the year, an executive with one of the largest display makers says.

SAN JOSE, Calif.--A shortage of flat-panel displays is expected to continue through the rest of the year, despite the recent opening of a new-generation plant, an executive with one of the largest display makers said Friday.

That assessment may not bode well for PC makers that are looking to satisfy consumer demand for flat-panel monitors, especially during the holiday season.

"Today, there is a shortage situation. This is due to the popularity of computer monitors," Carl Steudle, marketing vice president for LG Philips LCD America, said during a keynote address here at the Semicon West convention. "The (fabrication plants) are not making them fast enough to meet demand. And supply will be tight for 2002."

In late May, LG Philips cut the ribbon on a new, fifth-generation plant in Korea, which produces a larger sheet of glass material, or substrate, that can fit a larger number of liquid crystal display (LCD) panels per sheet. The plant produces sheets of glass that can now hold nine 18-inch flat panels, versus four at the fourth-generation plant.

The new plant is currently producing 30,000 sheets per month, and the company plans to bring the volume up to 60,000 by the end of the year, Steudle said.

Samsung, meanwhile, is slated to open its fifth-generation plant as early as the fourth quarter. But because of the time needed to increase production, these two plants will not likely offset the demand being felt today, he added.

LG Philips is focusing its production on 18-inch computer monitors and also panels that are 20 inches and larger for TVs.

"LCD TVs is where we think the next big market will be, and the larger monitors are also popular," Steudle said. "We could do smaller monitor panels, but that's not where our focus will be."

LG Philips is taking these steps, he added, even though the 15-inch computer monitor remains one of the most popular sizes.

In the future, the company may consider developing LCD panels under 6.4 inches, currently its smallest size. Steudle noted that an oversupply of panels last year caused many manufacturers to seek out new markets for the panels, such as personal digital assistants.

"We're looking at other applications to supplant the PC drug," he joked.

As a number of players in Japan, Taiwan and Korea prepare to bring their their fifth-generation plants into service, Steudle notes the market will likely face an oversupply in two years--the time it typically takes, from idea to production, to build a new plant. One Japanese company is already setting the groundwork to open a sixth-generation plant, he said.

But with the number of players entering the market hoping to ride the coattails of the current demand, Steudle predicted that the industry will consolidate.