Producers are betting on a surge in demand for flat screen TVs

LG Philips LCD, the world's second largest LCD screen maker, is to invest 3.4 trillion won ($2.9bn; �1.64bn) to increase production of flat displays.

It is part of a 25 trillion won spending plan over the next 10 years to capitalise on growing demand for flat screens on big-screen televisions.

LG Philips LCD is a 50-50 joint venture between South Korea's LG Electronics and Dutch firm Philips Electronics.

It plans a $1.95bn initial public offering in July to fund the venture.

Computer favourite

South Korean rival Samsung has also pledged to spend 20 trillion won on new production lines over the next decade.

Display makers are hoping thin TV screens will prove as popular as flat computer screens.

The upgrade from traditional cathode-ray boxes is expected to be the biggest change in TV technology since the switch to colour from black-and-white.

Restructuring at LG Philips has cost jobs in recent years. Its display factory in Newport, Wales, ended production in August 2003 and all 870 jobs at the site were lost.