Demand for plasma screen TVs is expected to keep on growing

It will go up beside an existing plant in Amagasaki, western Japan, and will make 6 million, 42-inch screens a year.

Matsushita expects the increased output to let it produce screens more cheaply at time when retail prices are falling.

It also is competing against rivals who produce large televisions with liquid crystal displays, rather than plasma.

"This is an aggressive move by Matsushita," said Koichi Hariya, senior analyst at Mizuho Securities.

Mr Hariya continued that Matsushita's expansion would let it make screens more cheaply than rivals and that he would expect it "to get more difficult for some players to keep up".

'Top manufacturer'

Demand for the screens is expected to pick up in coming years and analysts said that Matsushita's plant would be coming on line at a good time to benefit.

Ken Morita, president of Matsushita plasma display unit, said that there was "no doubt that demand will continue to grow".

The company has ambitious plans for its plasma business, operated with minority partner Toray Industries, Japan's biggest maker of synthetic fibres.

"We aim to be the world's top manufacturer" of plasma screens, said Mr Morita.

Matsushita has about a quarter of the world's plasma television market and wants to expand that to 40%.

Rivals include South Korea's LG Electronics and Samsung Electronics, and Japan's Hitachi, Pioneer and Sony.