TOKYO, May 30: Japan's top semiconductor makers are shifting the focus of their investments away from memory chips and toward the fast-growing market for liquid crystal displays (LCDs).

Concerned over weak market conditions for dynamic random access memory (DRAM) chips, whose prices slumped last year, the companies are pinning their hopes on an expected surge in demand for LCDs in computers and car navigation systems, analysts say.

"The companies are boosting investment in LCDs, especially 12.1-inch TFTs (thin film transistors), because current supply-and-demand conditions are very tight," a senior analyst at ING Baring Securities (Japan) Ltd Masashi Kubota said.

Toshiba Corp said it plans to invest 20 billion yen ($172 million) in LCDs in the current business year to March 1998, up from 12 billion yen ($103 million) in the previous year.

The company also plans to cut its investments in memory chips by 12 per cent to 150 billion yen ($1.29 billion).

"Our investment plan reflects current market conditions," said a Toshiba spokeswoman. "Growth in the chip market has become dull."

Matsushita Electric Industrial Co Ltd , an electronics giant that sells consumer electronics under the Panasonic and National brands, plans to invest 35 billion yen ($301 million) in LCDs in the 1997/98 business year that started in nearly seven times the amount spent in the previous year.

The company plans to build a new production line for TFTs, the most advanced type of LCD, at its Ishikawa factory in northwestern Japan.

The company aims to boost annual sales of LCDs to 150 billion yen ($1.29 billion) by the 2000/01 business year from 60 billion yen ($517 million) in 1996/97.

In computer chips, by contrast, Matsushita plans capital investment of 100 billion yen ($862 million) in fiscal 1997/98, unchanged from the previous year.

Sanyo Electric Co Ltd said its investment in LCDs would rise ten-fold to 550 billion yen ($4.74 billion) in 1997/98, due mainly to the construction of a new 47 billion yen ($405 million) factory to produce TFT-LCDs.

"We expect that, in the future, applications for LCDs will extend to desktop PCs as well as notebook-sized PCs," said a Sanyo spokesman.

The LCD boom is also attracting entrants from outside the semiconductor sector.

Sony Corp and Toyoda Automatic Loom Works Ltd, an affiliate of top Japanese carmaker Toyota Motor Corp, said earlier this week that they are considering a tie-up to manufacture and market LCDs.

The Nihon Keizai Shimbun business daily reported on Wednesday that the two companies will spend 50 billion to 60 billion yen ($431 million to $517 million) to build a factory in Aichi Prefecture in western Japan to make low-temperature polysilicon LCDs.

The Toyota group is eyeing the possible widespread use of LCDs in dashboard-mounted car navigation systems.

The new factory is expected to start production as early as the second half of the 1998/99 business year.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.