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S. Korea's LCD makers at full operation despite global glass substrate shortage
SEOUL, March 7 (Yonhap) -- While Taiwanese makers of liquid-crystal display (LCD) panels struck a snag in production due to a global glass substrate shortage, South Korean LCD makers are maintaining full operation at their plants, according to industry sources Sunday.
According to the sources, Taiwan's major LCD makers such as AU Optronics Corp. (AUO), Chi Mei Optoelectronics Corp. (CMO) and Chung Hwa Picture Tubes Ltd. (CPT) are operating their LCD plants at 70-80 percent of capacity.
In contrast, South Korean makers such as Samsung Electronics Co. and LG Display Co., the world's largest and second-largest LCD makers, are operating their lines at practically full capacity, according to the sources.
Taiwanese makers have not been able to achieve full operation rates despite the increasing demand for LCD panels worldwide, as there is a worldwide shortage of glass substrates that are needed to make LCD panels, experts said.
According to market researcher DisplaySearch, the glass substrates were in short supply worldwide by about 8.4 percent of the demand in the fourth quarter of last year. Taiwanese local media also reported recently that the glass substrate shortage among Taiwanese LCD makers reached nearly 10 percent compared to demand.
LCD glass substrate manufacturers there, who slashed production after suffering from years of oversupply, have been reluctant to swiftly increase their production to the pre-downturn level, industry sources said.
A recent series of earthquakes that has hit Japan and Taiwan also caused a temporary shutdown of some LCD glass substrate plants there, they added.
While Taiwanese LCD makers have failed to meet the global LCD demand due to the glass substrate shortage, South Korean LCD makers have secured a steady supply line of the glass, allowing them to increase production in accordance with the rising global demand for LCD panels.
Over 90 percent of the glass substrates supplied to LG Display come from Paju Electric Glass, LG's joint venture with Japan's Nippon Electric Glass, and Samsung Corning Precision Glass, a joint venture between Samsung Electronics and U.S.-based Corning Inc., the world's largest glass producer.
Samsung Electronics also relies mostly on Samsung Corning for glass substrates used for LCDs.
Glass producers in Taiwan and Japan prefer supplying their products to South Korean companies because of their high operation rates and their steady demand, according to industry sources.
"Taiwanese LCD makers seem to have lost credit from their glass suppliers," said an industry source, who asked not to be named.
While Taiwanese LCD makers decreased their operation rate to 30 percent in 2008 when the global economy was hit by the U.S.-sparked financial crisis, LG Display still maintained an operation rate of 82 percent or above. Samsung Electronics also maintained 79 percent or higher operation rate.
Since then, glass substrate makers have favored industry leaders with high and steady operation rates, where they can steadily supply their glass substrates, pushing Taiwanese companies down on their supply priority list, the source added.
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