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UPDATE 2-Sharp, CEC to set up LCD plant in Nanjing

* Plant to use 8th-generation glass substrates

* Investment, stake, production start undecided

* Sharp to sell older Gen-6 LCD gear to CEC unit in Nanjing

* Gen-6 plant initial capacity at 60,000 substrates/mth

(Adds details)

TOKYO, Aug 31 (Reuters) - Japan's Sharp Corp 6753.T said on Monday it will set up a venture with China Electronics Corp (CEC) to make LCD TV panels from 8th-generation glass substrates in Nanjing to meet growing demand in China.

Consumers are making a quick shift to LCD TVs in China, where unit TV shipments are hitting record highs thanks to government stimulus packages, but where price competition has intensified against Chinese makers.

Sharp, which trails Samsung Electronics 005930.KS and Sony Corp 6758.T in sales of LCD TVs, said that it was still in talks with CEC and Nanjing City about how much it will invest in the venture and the timing of production.

Sharp also said on Monday it will sell older equipment to make LCD panels using smaller 6th-generation substrates to a joint venture set up between CEC unit Nanjing China Electronics Panda Group Corp (CEC Panda) and Nanjing City.

CEC Panda has a listed unit, Nanjing Panda Electronics Co 600775.SS.

Nanjing CEC-Panda LCD Technology Co is expected to come online in March 2011, with an initial monthly production capacity of 60,000 glass substrates, to be lifted to 80,000 substrates a month.

Sharp, which will not invest in the 6th-generation venture, declined to disclose the sum of the equipment sale.

Sharp in October plans to start output at its new west Japan plant using even larger 10th-generation glass substrates.

A larger substrate yields more panels, helping manufacturers cut production costs.

Sharp also said it will set up an LCD research and development centre in Nanjing in April 2010, as it seeks to make LCD products geared for the China market.

Shares of Sharp closed down 0.5 percent prior to the announcement, in line with a 0.6 percent fall in Tokyo's electrical machinery subindex .IELEC.T. (Reporting by Mayumi Negishi, Kiyoshi Takenaka and Taiga Uranaka; Editing by Joseph Radford)

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