UPDATE 1-LG Display CEO: glass shortage may ease oversupply

(Adds more CEO quotes, analysts, LG Chem's investment)

SEOUL, July 17 (Reuters) - LG Display expects the LCD industry to face an oversupply situation between late this year and early 2010, but its CEO said the impact could be limited due to glass shortages and possible output cuts by makers.

LG Display (034220.KS), the world's No. 2 maker of liquid crystal display (LCD) panels, reported forecast-beating earnings on Thursday helped by robust demand for flat-screen TVs and higher panel prices on tight raw material supplies. [ID:nSP56216]

Its shares rose 2 percent to 35,500 won by 0110 GMT, leading the wider market's 0.5 percent gain.

"There will be an oversupply of some extent between from December through February," chief executive Kwon Young-soo told reporters at a news conference.

"But I doesn't appear too worrisome. Even if we face oversupply, I expect makers to choose to reduce output rather than going into a price war."

He added the shortage of glass used in screens was severe and could change the outlook. Glass suppliers such as Corning Inc (GLW.N) have been slow to raise output after last year's slump in the LCD sector, keeping a lid on capacity growth.

LG Chem (051910.KS), LG Group's chemicals unit, said on Friday that it planned to invest 430 billion won ($340 million) in LCD glass production until March 2010. [ID:nSEL000694]

Kwon also said he expected the company to start making organic light-emitting diode (OLED) panels for TV sets by 2012, although the timing for volume production had yet to be decided.

Active-matrix OLED is considered the next-generation display technology as it makes thinner, more power-efficient and higher quality display panels than conventional LCD.

Kwon said LG Display aimed to become the LCD sector's leader in terms of profitability by 2011. The company's operating profit margin was 11 percent in 2008 and 10 percent in 2007. Top LCD maker Samsung Electronics Co Ltd (005930.KS) posted 11 percent and 13 percent margins for 2008 and 2007, respectively.

Jeff Kim, an analyst at Hyundai Securities, forecast LG's operating profit would reach 887 billion won in the third quarter, more than quadrupling from the second quarter.

"Planned capacity expansion will help LG Display strengthen its position in the TV panel market and enhance ties with top customers," he said. (Reporting by Rhee So-eui; Additional reporting by Seo Eun-kyung; Editing by Jonathan Hopfner)