SEOUL (Reuters) - South Korean display maker Samsung SDI Co (006400.KS) said on Monday it would boost production of next-generation organic displays to six times the current level by mid-2009, spending $529 million.

The move comes as leading panel makers try to grab a piece of the fast-growing market for active-matrix organic light-emitting diode (AM-OLED) displays, which make better-quality, slimmer and more energy-efficient screens than liquid crystal displays.

But makers need to clear hurdles such as cutting production costs and maximizing screen size in order to see an adoption in a wider range of applications.

Samsung SDI, which produces small-sized AM-OLED screens used in handheld devices, said in a filing with the local exchange that it would invest 551.8 billion won ($528.6 million) until mid-2009 to expand its AM-OLED output.

When the investment is completed, its production capacity will reach 9 million units a month in 2-inch screen terms, compared with 1.5 million currently, the company said.

Other makers are also moving fast to launch OLED products and build scale. Japan's Sony Corp (6758.T) last November started selling small-sized TVs using OLED technology and Toshiba Corp (6502.T) plans to ship small-to-medium-size OLED screens for mobile devices in the autumn.

Last week, Japan's Sankei Shimbun daily reported Matsushita Electric Industrial Co (6752.T) is finalizing plans to mass-produce 37-inch OLED TVs in three years.

Market researcher iSuppli said in May it expected global shipments of AM-OLED panels to nearly quadruple in 2008 to 10.2 million units, with revenue reaching $225 million.

Shares in Samsung SDI ended up 0.12 percent at 83,600 won, outperforming the wider market's (.KS11) 0.57 percent loss.

($1=1043.8 Won)

(Reporting by Rhee So-eui; Editing by Keiron Henderson)