By Kim Yoo-chul
Staff Reporter

Samsung Electronics and Japan's Sony plan to jointly construct a fourth flat screen factory with an investment of some $1.8 billion in South Korea.

The new liquid crystal display (LCD) line, called ``the phase 2’’ facility of the existing 8-2 facility, will be built by S-LCD, their joint venture that already operates three factories in Tangjeong, South Chungcheong Province.

``We are in detailed talks with Sony for additional investment in the 8-2 line, and the results will come out soon,’’ a high-ranking Samsung Electronics official told The Korea Times, Sunday.

``Samsung’s visual display business unit is highly likely to join the project after Vice Chairman Lee Yoon-woo had earlier promised to guarantee `management independency’ on Samsung’s key affiliates,’’ another Samsung source added.

The sources, however, declined to elaborate further.

In April this year, Samsung and Sony agreed to spend 1.8 trillion won to expand the manufacturing capacity of LCDs amid ever-increasing global demand for LCD televisions.

The ``phase 1 of the 8-2 plant’’, which will start mass production in the second quarter of 2009, is expected to manufacture 60,000 glass sheets for TV panels over 50 inches a month, with half of the products bought from Sony in line with their share holdings in the S-LCD joint venture.

``Instead of massively producing super-sized TV panels, we want to maintain the current leadership by focusing on the industry’s mainstream 40-inch level panels because few homes can afford TVs over 50 inches,’’ according to Samsung officials.

In November 2006, S-LCD completed its second line called 8-1, which is also eighth-generation. The new line has been given the name 8-2. In addition to its other eighth-generation line in Tangjeong, called line 8-1, S-LCD operates its original seventh-generation line.

With each successive jump in production technology, the size of the mother glass sheet is increased and economies are introduced into the production process, with the higher technology lines making larger panels at a lower per-inch cost, analysts say.

In February this year, Sony started talks with its local rival Sharp toward investing in a new production line that Sharp has under construction in Japan. The line will be based on 10th-generation technology and will be suited to making LCD panels over 60 inches.

Samsung’s flat-panel division, which had a first quarter profit of 1.01 trillion won, is expected to reap some 980 billion won in the second quarter due to ``seasonal factors.’’

LCD makers have been reaping their best profits since 2004 after capital-spending drawbacks the past several years brought about industry shortages.

A growing number of companies have been boosting capacity ahead of an expected boom in demand for flat-screen TVs and other consumer electronics ahead of the Beijing Olympics.

LG Display, the world’s No. 2 LCD maker after Samsung, said last week the company will construct a larger panel line for TV screens, while a decision on the glass size at the possible plant had yet to be made.

yckim@koreatimes.co.kr