LG Display sees tight market

TOKYO/SEOUL (Reuters) - Flat-screen maker LG Display Co Ltd (034220.KS) expects continued tight supply in the liquid crystal display (LCD) market in the second half and is seeking to increase ties with Chinese TV makers, a company executive said on Thursday.

"The overview of the second half is that (the market) will be tight," Champ Shin, vice president in charge of TV screen sales, told the Reuters Global Technology, Media and Telecoms Summit.

Despite the U.S. economic slowdown and heavy snow in China earlier this year, LG Display does not see any risk factors that are likely to drive demand down, Shin said.

LCD makers including No. 1 Samsung Electronics Co Ltd (005930.KS), second-ranked LG Display and AU Optronics Corp (2409.TW) are enjoying strong demand as the summer's Beijing Olympic Games fuels demand for thin TVs.

However, intensifying competition in the flat-screen TV market this year is clouding the otherwise strong outlook in the sector. Sony Corp's (6758.T) aggressive price cuts in the key North American market have recently raised concerns about a margin-eroding price war.

But Shin downplayed the impact of those price cuts.

"Over the past five months we haven't seen much market share increase in Sony brands in the U.S., even though they dropped their prices twice."

Shin didn't give price forecasts for the second half but said major brands' entry model 40-inch LCD TVs, currently selling for around $1,200, could come down to $1,000 by the year's end.

Still, heightened competition could weaken the market position of LG Display's key clients, such as parent company LG Electronics Inc (066570.KS), Dutch Philips Electronics (PHG.AS) and Taiwan's Amtran Technology (2489.TW), analysts have said.

For sustainable growth, LG Display has been seeking alliances with TV makers in Asia, such as Vizio TV maker Amtran, to strengthen its client base and lock in buyers when the panel demand is strong.

Shin said that alliance discussions would focus on cost cuts and may be concluded soon.

"We cannot wait long. We're hurrying up."

LG Display is looking at China as its most promising growth region and trying to enhance business ties with Chinese makers.

"The growth rate in China is much higher than other regions. For the time being, we are focusing on China."

LG Display supplies more than 30 percent of TV screens to China's top six brands including Hisense Electric Co (600060.SS), Thomson TCL Electronics (TTE), Haier Group and Skyworth Digital Holdings Ltd (0751.HK), according to analysts.

Shin said LG Display had started talks with Matsushita Electric Industrial Co Ltd (6752.T) to promote its LCD technology standard in China.

Panasonic maker Matsushita, one of the world's biggest makers of plasma screens, is spending 300 billion yen ($2.8 billion) to build an LCD panel plant by 2010.

But Shin expressed little concern about the added capacity.

"That factory may not be sufficient to meet Panasonic's demand," he said.

(For summit blog: summitnotebook.reuters.com/)

(Editing by Hugh Lawson)