Matsushita Plans $2.4 Billion Investment in Display Plant

Matsushita Electric Industrial will spend about 280 billion yen ($2.4 billion) to build the world's largest plasma display factory in western Japan, a source close to the matter on

Matsushita, the world's largest maker of plasma display televisions, will begin construction of the factory as early as this year, and the plant is expected to have an annual output capacity of around 10 million units, the source said.

The maker of Panasonic products will announce plans for the factory at a news conference after the market close on Wednesday.

Matsushita spokesman Akira Kadota said the company would make an announcement about its investment plans on Wednesday, but he would not comment on specifics about plasma display investments.

Global demand for flat TVs is growing but unit prices are falling rapidly, pressuring makers to cut production costs to stay competitive. Plasma TVs make up about 18% of global flat TV demand, which was estimated at 54.27 million units in 2006, the Nikkei business daily said, citing DisplaySearch data.

The U.S. research firm said earlier this month that plasma display panel revenue was expected to be flat in 2007 at $7.7 billion because of sharp price declines.

Matsushita currently has four plasma display factories in operation with a fifth due to come on line this summer, boosting its overall annual production capacity to the equivalent of 11.5 million 42-inch panels.

It will likely close two older factories in Osaka as the new factory in Hyogo comes on line, eliminating about 3 million units of capacity. With the new factory, its overall capacity should come to about 18 million units a year, the Nikkei said. The paper said production at the new plant will likely begin in summer of 2008.

Matsushita said in October it expected to sell about 3.7 million plasma TVs in the year to March 2007, down from its original target of 4 million, because the sales mix was likely to include a greater proportion of larger sets.

Matsushita's competitors in the plasma TV market include Samsung Electronics, LG Electronics, and Pioneer.

Pioneer Misses Targets

Pioneer separately said that its North American plasma TV revenues in the six months to March would likely miss an internal target by as much as 20% due to sharp falls in price.

Quitting its own plasma panel production and starting to buy key components for plasma TVs from outside manufacturers is an option for the electronics maker, Tom Haga, head of Pioneer's North American operations, told Reuters in an interview at the Consumer Electronics Show in Las Vegas. "Sales are growing in unit terms, but price declines are brutal," Haga said. "Plasma TV revenues are likely to fall short of what we have originally anticipated by 15 to 20%."

The North American market accounts for one-third of Pioneer's plasma business. Pioneer is the world's sixth-largest plasma TV maker in July-September according to DisplaySearch.