GLOBAL capital spending on LCD manufacturing is expected to hit a historic high this year and then drop 35 percent in 2009 as a slowing global economy will delay companies' planned expansion, while spending on the Chinese mainland will grow at a lower rate, a research firm said yesterday.

In terms of total capital expenditure for land, buildings and equipment for liquid crystal display manufacturing, the industry is expected to invest US$16.3 billion globally in 2008, a 78-percent jump over 2007, according to United States-based DisplaySearch.

The rapidly falling prices of LCD panels, low fabrication utilization and continued concerns about the global economy will cause previously planned fab expansion to be delayed, pushing down forecast 2009 spending by 21 percent to US$10.6 billion, DisplaySearch said.

The price of LCD panels, used in laptops, LCD monitors and TVs, has dropped since the second quarter by up to 30 percent. The US credit crisis has dashed hopes that Christmas demand will help the price to rebound, unlike in past years, industry insiders said.

"Multiple fab expansion planned for 2009 has already been delayed. With demand outlook still bleak, continued bad news about the economy and utilization reductions, the worst may not yet be over," Charles Annis, a DisplaySearch's analyst, said in a statement.

The oversupply conditions won't change until the middle of next year, analysts said.

The capital spending on the Chinese mainland will grow eight percent next year from 13 percent in 2008. By comparison, the growth rate in 2009 in India and Singapore is forecast to be zero, DisplaySearch said.

Sources said the domestic LCD panel makers need to catch up with top overseas rivals such as LG Display, Samsung, AUO and CMO which are all building Generation 8 (Gen 8) or more advanced (like Gen 10) facilities. By comparison, the most advanced LCD factories on the Chinese mainland are only Gen 5 standard.