On February 11, LG.Philips LCD (LPL) announced that it plans to increase the capacity of its G7 fab, called P7 and located in Paju, South Korea, from 90,000 glass substrate per month input capacity to 110,000 by the third quarter of 2007. LPL’s P7 is able to handle glass substrates with a dimension of 1950 x 2250mm. LPL will spend about 200 billion KRW (about US$213 million) for its capacity expansion. It was expected that LPL’s P7 would increase its capacity to around the 110K – 120K level, but the increase is coming slightly faster than expected and will impact the supply and demand balance in the LCD industry. With the additional capacity, the shift is toward a slight oversupply in the second half of 2007. The main sizes manufactured in P7 will be 42″ and 47″ LCD TVs and will most likely reduce LCD panel prices for these sizes. A reduction in panel prices for 42″ and 47″ LCD TV LCDs will allow for more competition in this space with the main competition coming from S-LCD with its 40″ and 46″ sizes. Also there is the possiblity of LPL using its P7 line to compete indirectly with Samsung and Sharp’s G8 lines that are focused on manufacturing 50″-class LCD TV panels. LPL’s capacity expansion decision will also put more pressure on plasma display panel (PDP) manufacturers that are producing 40″-class PDPs and make it increasingly difficult to compete in the 40″ space.