By Kim Yoo-chul
Staff Reporter

Samsung Electronics, the world's biggest supplier of liquid crystal display (LCD) panels, will slash its investment by 40 percent this year.

"Samsung Electronics is set to invest some 2.2 trillion won in LCDs in 2009 _ one trillion won in maintenance of facilities and 1.2 trillion won for expansion of the existing eighth-generation 8-2 production facility," an executive from the company's LCD plant in Tangjeong, South Chungcheong Province, told The Korea Times, Sunday.

Samsung invested 3.7 trillion won in LCDs last year.

"Samsung will maintain flexibility in investment. But one thing that is clear is there will not be a recovery in demand in the first quarter," according to the executive, who asked not to be identified.

"The expansion of the second phase in the eighth-generation 8-2 facility will be needed as the global LCD market is expected to turn around from the latter half of this year," he said.

A Samsung spokesman declined to comment on the issue.

LG Display, the world's second biggest maker of LCD panels, recently said it would halve capital expenditure this year to between two trillion won and 2.5 trillion won from 4.5 trillion won in 2008.

Industry sources said Samsung's factory utilization rate averaged around 85 percent in the fourth quarter as the company's flat-screen division had been hit hard by weaker demand for flat-screens used in high-end handheld gadgets and pricey TVs.

"The adjustment in panel productions has been widened but the rate will be normalized in the first half," according to the official.

Sales at the company's LCD division fell 12 percent and its operating profits was 230 billion won in the fourth quarter.

The plan comes after Sony and Sharp decided to postpone the establishment of a joint firm that will make large-screen LCD panels until March 2010.

"Samsung won't change its aggressive strategy in panels, but it needs some break time, which is good for both the industry and the company," said an analyst at Woori Investment & Securities.

Separately, LG Display CEO Kwon Young-soo said the LCD industry has hit rock bottom and TV panel prices will recover in the coming months amid increasing demand for small-sized flat-screen TVs.

"TV panel prices will likely stop the downward trend and recover," Kwon said.

yckim@koreatimes.co.kr