In further indications of the declining plasma TV market, LG has said that it is shutting a key plant that makes plasma display panels in an effort to cut costs and rejuvenate its business in the sector.

LG spokeswoman Judy Pae said the shutdown is scheduled for the first half of this year. “This move is to increase operational efficiency and to reduce costs” totalling $22 million  to $32 million annually, LG Electronics said in a statement issued later. “This is a part of LG’s ongoing efforts to improve the performance of its plasma display panel business as a whole,” the statement read.

LG Electronics is South Korea’s largest consumer appliance manufacturer. The company is the world’s second-largest plasma display maker by shipments. It is also a major global producer of cellphone handsets. The plant to be shut, named A1, is the oldest of the company’s four and has an annual capacity of 840,000 42-inch plasma panels used in flat screen televisions, or 70,000 a month.

LG’s total 42-inch plasma display module production capacity will decline to 360,000 units per month, or 4.32 million a year, with the loss of the A1 plant, the statement said. LG Electronics lost 123 billion won ($132.1 million; euro98 million) in the three months ended March 31. It recorded net profit of 150.8 billion won a year earlier. Pae confirmed that LG’s plasma division suffered a loss in the first quarter, but said she could not specify how big it was.

The market for flat panels, which includes plasma and liquid crystal displays, has suffered amid oversupply and falling prices for the components. LG competes with other plasma makers, including South Korea’s Samsung SDI Co and Japan’s Matsushita Electric Industrial Co. Nam Yong, LG’s chief executive, last month denied speculation that there were plans to sell or shut down the plasma business, telling investors and analysts that the company would study the best way to proceed, according to Pae.