Matsushita Electric Industrial Aims to Grab Plasma Market Share Amidst Intense Competition (MC)

| About: Matsushita Electric (MC-OLD)

Matsushita Electric Industrial (MC) made the business news top headlines on Saturday in Japan as the word is now out that it will be investing some 160 billion yen or US$1.37 billion (at Y117/US$1) in a new plant dedicated to manufacturing plasma TV display panels (NYSEARCA:PDP). This will more than double Matsushita’s current capacity to an annual output level of 6 million units making it the largest PDP production plant in the world.

The plant will be located in Hyogo Prefecture, Japan, next to a plasma panel plant that went online last September. Construction will begin this summer and the new plant is scheduled to go online in the summer of 2007. Once online, production capacity will be increased incrementally with a target of expanding PDP production at 42-inches to a maximum of 550,000 per month. This will be complemented by current production levels reaching 350,000 per month at plants located in Hyogo, Osaka, and Shanghai. Production capacity at the current plant in Hyogo Prefecture is planned to be increased in July resulting in a total production capacity of 425,000 for all Matsushita plants.

Matsushita is citing huge increases in demand for plasma televisions, particularly in the United States and China. At the same time it wants to improve its ability on the supply side early on in order to establish a strong market share and to ward off fierce competitors from the LCD TV camp, such as Sharp, and also from increasingly competitive South Korean manufacturers.

Plasma televisions and DVD recorders are both key products to expanding Matsushita’s operating results. Matsushita forecasts both products will do very well ahead of large scale events such as the upcoming World Cup Soccer tournament to be held in Germany and the expanding digital terrestrial television broadcasting in Japan.

It’s projected that global thin screen television sales will jump by 60% this year to approximately 45 million compared to last year’s sales. Plasma screens are expected to makeup about 10 million of these sales with Matsushita aiming to control 40% of the market. In the LCD TV market domestic rival Sharp has already invested 150 billion yen or US$1.28 billion (at Y117/US$1).