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

| About: Matsushita Electric (MC-OLD)
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This past Friday, Sharp Corp., President Katsuhiko Machida announced the firm will be building-up production capacity for manufacturing LCD panels at its main factory (Kameyama) from April. The total amount of capital involved in this ramp up is said to be approximately 15 billion yen or US$128 million (at an arbitrary exchange rate of Y117/US$1). This year’s much awaited World Cup Soccer tournament is one of the biggest reasons behind Sharp’s optimism. Sharp is the world's largest manufacturer of LCD TVs and is aiming to increase its global market share currently at about 17 - 18% to 20%.

It is expected that global demand for LCD TVs will increase from the 20 million unit level achieved in 2005 to about 36 million units this year. Sharp, based on what it perceives to be robust consumer demand – especially from the spring – expects to increase its sales from the 4 million unit level recorded in 2005 to 6 million-plus units this year. World Cup Soccer is reason enough to expect strong LCD TV sales as soccer is a very popular sport in Japan and in many other countries throughout the world. At any rate, 2006 is a big year for sports with Torino Winter Olympics and the Baseball World Cup also taking place this year.

Sharp is not alone as Matsushita Electric Industrial (MC) and other rivals are also planning to boost production. Machida is well-aware of the cut-throat competitive nature of the business and he is already discussing an earlier launch of a second factory for production of LCD panels. The second factory had been planned to open this October.