Price reduction boosts LCD TV production

Paul Boughton

In the light of dramatic reductions in pricing and increased consumer acceptance, iSuppli Corp has raised its forecast for LCD TV panel production in 2006, and now is predicting that LCD TVs in three years will displace CRTs as the leading type of television manufactured worldwide.

iSuppli has boosted its 2006 forecast of shipments of LCD panels used in televisions to 46.7 million units, up from its previous prediction of 41.9 million units. LCD TV panel shipments now are forecasted to rise by 74 per cent compared to 2005.

“Increased production capacity from sixth- , seventh- and eighth-generation LCD fabs has led to rising availability and decreasing costs for the types of large-sized panels used in televisions,” said Sweta Dash, director of LCD and projection research for iSuppli.

LCD TV panel shipments in the first quarter increased by 7 per cent compared to the fourth quarter of 2005, reaching 10.6 million units, Dash noted. As a result of this, and due to demand that fell short of suppliers’ expectations in the first quarter, the average price for larger LCD TV panel sizes, ie 32-inch and 40/42-inch, fell by 17 per cent and 14 per cent respectively in May compared to January 2006.

“Although LCD-TV panel demand increased in the first and second quarters due to sales related to the World Cup, shipments fell short of the expectations of some suppliers,” Dash said. “Despite that, the second quarter is expected to bring continued growth for LCD TV panel makers due to reduced prices and increased adoption among consumers. Shipments will accelerate further in the second half due to these factors.”

Increases in capacity and falling prices for panels are impacting the LCD TV market itself, causing consumers increasingly to choose LCD TVs rather than sets based on CRT and other display technologies. LCDs accounted for 17 per cent of television shipments in the first quarter, up from 15 per cent in the fourth quarter, according to iSuppli.

With its rate of adoption accelerating, LCD will become the leading display technology for television by 2009, accounting for 48 per cent of factory shipments. The CRT’s share of the market will decline to 42 per cent that year, marking the first time ever that CRT is not the leading technology for television display.

By 2010, LCD will account for the majority of television shipments for the first time, with 56 per cent of unit shipments, iSuppli predicts.

The figure below and attached presents iSuppli’s worldwide forecast of the percentage of television shipments broken down by display type.

In terms of market share in the LCD TV panel business, LG Philips LCD (LPL) maintained its leadership in the first quarter, with 22.3 per cent of unit shipments, according to iSuppli. The company’s shipments increased to 2.4 million units in the first quarter, up 6 per cent from 2.2 million in the fourth quarter.

Samsung, Chi Mei (CMO) and AU Optronics (AUO) in the first quarter retained their second- , third- and fourth-place rankings with market shares of 20 per cent, 18.7 per cent and 16.8 per cent respectively. Both Samsung and CMO saw their market share decline slightly.

However, AUO managed to boost its market share on a strong surge in unit shipments.

The varying performances of Samsung and AUO can be attributed to the portion of the market they are choosing to serve. AUO is focused on increasing production of the popular 32-inch and 37-inch sizes, which are most efficiently made at the type of sixth-generation fab it operates. Samsung, on the other hand, has focused more of its capacity on higher-priced, lower-volume 40-inch and larger-sized TV panels, as it ramps up in its two seventh-generation fabs, one of which commenced production at the beginning of the year.

South Korean-based suppliers dominated the LCD TV panel market throughout 2005, controlling 44.8 percent of unit shipments in the fourth quarter, followed by Taiwan at 40.1 per cent. While Korea was still leading in the first quarter, with a 43.3 per cent share of sales, Taiwan closed the gap to just 0.6 of a per centage point.

Most of Taiwan’s rise can be attributed to the market-share increases posted by AUO. However, some of the increase may be due to the fact that Korea is focusing on the lower-volume 40/42-inch sizes, while Taiwan is concentrating on the higher-volume 32-inch and smaller sizes.

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