Over-ambitious TV sales targets have left manufacturers with a glut of panels that is driving down prices as makers offload their excess output, Panasonic Corp's <6752.T> television unit head said on Tuesday.

The major manufacturers and Chinese manufacturers had very bold plans, but the market is only forecast to be about 120 percent of last year, Yoshiiku Miyata, who runs Panasonic's TV division, told Reuters on Tuesday. Panasonic's own inventories were at normal or low levels, he added.

Nonetheless, oversupply by other makers will drag down prices industry-wide, squeezing profit margins until set makers are able to adjust output to the less-than-expected demand.

Some makers hiked their sales targets by 50 or 60 percent for the financial year that ends March 31, Miyata explained. His company took a more cautious view and planned for a 30 percent jump in sales on the previous year to 21 million sets.

I think makers' targets were too high. The biggest point for us is profits. We are not simply going all out to sell more. We had a moderate plan and I think we will be relatively undamaged, he added.

His domestic rivals may not have been as prudent, according to Japanese media reports. Rival Sharp Corp <6753.T> is to reduce LCD panel production for up to two months, a newspaper said earlier this month.

Sales of flat TVs are slowing down in the United States, Europe and China but remain healthy in Japan, partly thanks to a government subsidy Miyata said. An eco-point discount program, which had been scheduled to end in December, has just been extended to March next year.

Panasonic hopes that home and emerging market resilience will help the world's fourth largest flat television maker, which trails South Korea's Samsung Electronics <005930.KS>, and LG Electronics <066570.KS> as well as Sony Corp <6758.T> by market share, pull its TV business into the black in the second half of the current financial year.

But, it may not be enough to offset a squeeze to overseas earnings caused by a strengthening yen, which remains near 15-year highs against the dollar.

Despite the sales slowdown, Panasonic still expects to be close to its target of 21 million sets, thanks, Miyata said, to better than expected sales in North America and Europe at the start of the business year.

Sales of 3D televisions in the United States, however, may be worse than expected despite a strong showing in Japan because competition from the price-cutting South Korean makers has intensified, Miyata said.

(Reporting by Isabel Reynolds, editing by Tim Kelly and David Cowell)