The world's top five LCD makers - Samsung, LG Philips, AU Optronics, Chimei and Sharp - hold a combined 75 percent market share, which leaves limited space for newcomers, according to David Su, an AU Optronics vice president.

The profit margin in LCD panel manufacturing is now less than five percent as the result of heavy discounting, which jeopardizes profits of second-tier firms such as BOE, industry insiders said.

BOE posted a loss of 1.26 billion yuan in the first half and expects the red ink to continue through the end of the year.

"Even so, we have to expand capacity to maximize profit based on scale," BOE said in the statement.

Meanwhile, BOE joined with four TV giants - TCL Corp, Skyworth Group Co, Konka Group and Changhong Electric Co - as well as the Shenzhen government to jointly invest US$2.3 billion in manufacturing sixth-generation LCD panels.

The plant is scheduled to start production at the end of 2008, turning out 90,000 units a month.

BOE manufactures fifth-generation LCD panels in its Beijing facility. The next-generation line will allow the production of larger, more economical LCD panels.

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