TOKYO Faced with a shrinking capital spending budget and another year of red ink, Toshiba Corp. has declined to increase capacity at its Japan-based joint venture LCD plant, though partner IBM Corp. is making plans to boost production.
Contrary to some U.S.-based reports, Toshiba will forego expanding output of active-matrix TFT LCDs at Display Technology Inc. (DTI), one of the world's largest LCD production facilities, which is jointly owned by IBM and Toshiba. Meanwhile, IBM recently announced it would increase by 50 percent its output of high-resolution 14-, 15-, 18- and 20-inch displays at DTI next April.
Normally, IBM and Toshiba share the output of LCDs at DTI equally. But a paltry capital spending budget and fear of a renewed oversupply has led Toshiba to take a conservative route on new investment. The company will hold its own output of 550 x 650-mm and 360 x 465-mm glass sheets to 50,000 a month each, a Toshiba spokesman here said.
"All of the new output belongs to IBM," the spokesman said. Asked whether Toshiba will consider increasing its output at DTI, the spokesman said "at this moment we don't have any idea because our company performance has not been so good and we have to squeeze some of our investment."
After reducing its capital budget this fiscal year, Toshiba recently decided to again whittle down its total spending on equipment and facilities from $1.05 billion to $904.7 million. The decision came as the company reported earlier this month that its expected net income for the fiscal year would be $142.8 million in the red rather than $238.1 million in the black as it had originally forecast. Most of the capital spending cutbacks will affect memory chip production, which was the main culprit for the loss, the spokesman said.
As for LCDs, the company will keep its fiscal year investments at $76.2 million while emphasizing production of its own low-temperature polysilicon TFT displays, which have so far been adopted in PCs from Toshiba and Sony Corp. The company currently produces 20,000 of the displays each month.
"Even though PC manufacturers are facing a shortage of amorphous type of LCDs, we're not investing in amorphous so far," the Toshiba spokesman said. "We're concentrating on low-temperature polysilicon LCDs because we can add value. Low-temperature is very difficult to produce and there's lots of advantages over amorphous. Sixty percent of the external components can be reduced, and it also has low power consumption."