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07.13.2004
Originally featured on BroadcastEngineering.com
Taking the temperature of the flat panel market

Leading analyst firms released reports last month detailing the status of the plasma display panel (PDP) and liquid crystal display (LCD) markets.


The Samsung SDI PPM42H3 42-inch plasma display panel is just one of the 40-43-inch PDP products that have helped Samsung overtake Fujitsu-Hitachi in market share leadership.

Although every report acknowledges that the long-term outlook calls for sunny days across the board for most of the next four years, the LCD market has hit its first case of the hiccups in 2004, while PDPs have hit their stride in the market. Indeed, while sales of digital television equipment will rocket to $70 billion by 2008, according to the IDC, LCDs may have a tougher go of it in the short-term.

DisplaySearch's new study on PDPs point to one thing — booming sales. According to the research company's numbers, PDP sales rose 127 percent in Q1 '04 to 699,000 units – this during a traditionally slow time of year for sales. Quarterly revenues exceeded $1 billion for the first time, rising 88 percent to $1.02 billion. Total television shipments have risen 10 percent over the last year.

Moreover, analysts said these numbers are only the tip of the iceberg. PDP prices are expected to drop even further due to many factors, including rapid PDP supply growth, more cost-effective fabrications, falling material costs and healthy competition from other technologies. With improvements in performance and availability, along with lower prices, PDP TVs are expected to grow at a 62 percent CAGR with the technology's unit share rising from 0.6 percent in 2003 to six percent in 2008. Its revenue share is expected to triple from six percent in 2003 to 18 percent in 2008, according to DisplaySearch.

"With PDP manufacturers improving performance and enjoying significant supply chain advantages over microdisplay rear projection TVs and LCD TVs, which have been suffering from component constraints, the outlook for PDPs has never been brighter,” said Ross Young, DisplaySearch president and CEO. “Even with a double-digit surplus forecasted, we now expect PDP shipments to TV and public display manufacturers to rise at a 51 percent CAGR to 13.6 million units in 2008. Assuming no surplus and full utilization, more than 15 million units is possible. We expect PDPs to overtake RPTVs at 40-inches to 49-inches in 2004 with the price gap between PDPs and microdisplay rear projection TVs narrowing significantly over the next few years."

With the PDP market still in its beginning stages, the major players in the PDP market are still jockeying for the top position. After enjoying a marginal lead over Samsung SDI for most of this market’s existence, Fujitsu-Hitachi yielded to its rival as Samsung SDI took a 24 percent share of units and 22 percent of revenues. LG Electronics and Matsushita continued to be third and fourth. The primary source of Samsung’s leap came from its position in 40-inch to 43-inch PDP monitor sales. Fujitsu-Hitachi and Matsushita still control most of the 32-inch to 39-inch market, but that was not enough to hold off Samsung. Consumers still have not come around to larger monitors because prices still have not fallen to an acceptable range.

Meanwhile, the LCD market has hit a snag — but not because of lack of consumer demand, according to electronics marketplace research firm iSuppli/Stanford Resources. Rhoda Alexander, an analyst at the firm, cites a botched bait-and-switch as the primary factor to a slowdown in LCD sales in Q2’04. By Alexander’s account, LCD manufacturers tried to create demand for their 17-inch monitor lines by drastically reducing production of 15-inch monitors. Unfortunately for manufacturers, consumer demand did not migrate away from 15-inch monitors.

“With most of the pipeline stock depleted by the end of 2003, the drop in 15-inch panel production late in the fourth quarter was immediately reflected in a sharp decline in end-user sales of 15-inch products,” said Alexander. “While some of that 15-inch LCD monitor demand migrated to 17-inch and larger LCD monitors, much of it went elsewhere, i.e. to CRT monitors. Furthermore, some of the 15-inch demand was postponed, as users held on to their cash until the value-priced LCD monitors became available again.”

The stumbling point for LCD manufacturers seems to be their inability to get consumers to spend more than $300 per unit. Although greater profit margins lie in 17-inch and 19-inch sales, consumers continue to resist higher-priced larger screens. Unfortunately for LCD makers, the current $300 consumer spending point only lends itself to profit margins in 15-inch screens. This creates the conundrum.

“Offering 15-inch panels at prices that allow vendors to reach these customers is the obvious solution,” Alexander said. The alternative is pushing 17-inch panel pricing down far enough for vendors to reach those customers, which ostensibly does not appear to be a more profitable approach.”

Still, this consumer revolt seems to be a brief bump in the road in terms of LCD sales. LCD shipments in Q1’04 grew to 1.6 million units, up 31 percent from 1.3 million in the fourth quarter — a considerable feat when total worldwide shipments of TV sets totaled 38.5 million units, 12 percent lower than Q4’04. LCD revenue also reached $2.7 billion in Q1.

For more info: www.isuppli.com, www.displaysearch.com and www.idc.com.

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