All Out War – Sharp vs. Matsushita; How to Invest in Related Japanese & South Korean Stocks (MC, SNE, PIO, EWY)

Japan’s leading manufacturers of thin display panels for LCD and plasma TVs are engaged in an all out war, plowing big time money into their factories in order to ramp-up production and seize as much market share as early on as possible. Sharp and Matsushita (MC) have dominated the news over the past week with their aggressive capital investment plans. The second round features Sharp’s president Katsuhiko Machida launching the first salvo, an additional 200 billion yen (US$1.74 billion at Y115/US$1) investment in the 2nd Kameyama Factory.

Machida made the announcement at a press conference Wednesday in a downtown Tokyo hotel. With the new infusion, the 2nd Kameyama factory will be able to produce more than 4 times Sharp’s current production level by 2008. The 2nd Kameyama factory was due to be launched this fall, but Machida has expressed a strong interest in an earlier launch date. At any rate, the 200 billion yen will be divided in half and invested equally in years 2007 and 2008.

At the press conference, Machida rejected the possibility that there will be an over-capacity of thin panel LCD TVs in the market. His goal is not only for Sharp to be number one, but also to increase profitability -- something that analysts seem to be growing more concerned about as the competition intensifies.

Machida is moving quickly and holding nothing back to ensure supremacy in LCD TVs. Strong competition is also coming from neighboring country South Korea, where Samsung and LG are also investing large amounts of capital.

For those interested in investing in Sharp, I am sorry to say that although it does have ADRs, they are pink sheets (ticker: SHCAY.pk). I am skeptical of putting money into pink sheets; therefore your best bet if you are serious may be to go ahead and buy the shares traded in Tokyo (ticker: 6753). Commissions will be higher but the market will be far more liquid.

Matsushita Electric Industrial's shares, by the way, can be purchased easily in the U.S. Look for its ADRs, ticker: MC, which have a decent 3-month average daily volume of 331k.

For those interested in investing in South Korea as a whole, I would advise you to take a look at this ETF -- iShares MSCI South Korea (ticker: EWY). In terms of individual company investments and for a general background on investing in the country, take a look at this comprehensive post. Click here for information on investing in Samsung.

In separate news, Fujitsu also announced Wednesday that it will invest 120 billion yen (US$1.04 billion at Y115/US$) in a semiconductor production plant. (Regarding investing in Fujitsu (ticker: FJTSY.pk), the same situation applies as in the case of Sharp. Refer to Tokyo Stock Exchange ticker: 6702.)

* Here are 3 links to related stories posted this week covering the big investments being made in thin panel TV production:

Concern over Big Investments in Thin Panel TV Production (HIT, MC, PIO)

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

Sharp to Boost LCD Panel Capacity in Expectation of Robust Demand (MC)