The interruption of glass production in Japan following an earthquake is set to have a significant impact on the liquid crystal display (LCD) industry, it has been revealed.

In an interview with Reuters, Nomura analyst James Kim said the situation could cause a disparity between supply and demand which will last until November.

He added that on the back of this he had upgraded his view on the display sector to neutral from bearish as LCD makers will be able to improve their profit margins.

Share prices of LCD manufacturers have already been affected, with industry players in South Korea and Taiwan seeing their stocks rise.

However, Japanese manufacturer Sharp has been adversely affected as it is more directly impacted by glass substrate shortages stemming from the earthquake.

There were already concerns about glass shortages within the LCD sector prior to the earthquake, as suppliers have been slow to react to increased demand for televisions and computers prompted by the effects of China's economic stimulus package and a resilient North American market.

U.S. speciality glass maker Corning Inc has halted production of LCD glass at a factory in Japan, warning the shutdown would result in a 5 to 10 percent decline in the volume of glass shipments in the third quarter from the second quarter.

"Glass supply was already tight and this quake will contribute even more to that. This is good news for LG Display as a lead maker of LCDs," Moon Hyun-sik, an analyst at Meritz Securities, told the news provider.

Meanwhile, Michael On from Beyond Asset Management said he could see "no let-up in demand for LCD panels".

Sharp's LCD products are sold under its Aquos brand, with its original range having been designed by Toshiyuki Kita.

Source:

LCD shares up as Japan quake deepens supply worries (12/08/09)

Ÿ Adfero Ltd