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LCD-TV sales continue to grow; recession prompts manufacturers to pull back on outsourcing, says iSuppli

While the sales of LCD-TVs is growing, the current economic recession is causing a pullback in demand from anticipated levels and resulting in a decline in the level of anticipated contract manufacturing of LCD-TVs, according to the latest research from iSuppli.

Previously, iSuppli had projected that 35.2 percent of LCD-TVs would be outsourced to contract manufacturers in 2008; however, the final results for 2008 reveal that only 28.7 percent of LCD-TVs were outsourced.

This trend is expected to continue in 2009 with outsourcing lagging previous expectations by 5.6 percentage points. In 2010, 2011 and 2012, outsourcing will fall short of the previous forecast by 4.8, 3.2 and 2.6 points, according to the researcher.

Jeffrey Wu, iSuppli’s senior analyst for electronic manufacturing services and original design manufacturing, identifies weakening demand resulting from the recession as the main reason for the decline.

According to the researcher, while the LCD-TV market will continue robust growth this year, operational and financial challenges resulting from the recession are forcing OEMs to reconsider their internal expansion plans and outsourcing strategies, as well as initiate changes that are having an immediate impact on the supply chain.

Several leading LCD-TV OEMs and original design manufacturers reported operational losses in 2008, according to iSuppli. Samsung’s Digital Multimedia Division incurred an operational loss of $311 million in 2008, despite the company’s market share gains. In its fiscal year 2008, ending in March 2009, Sony incurred its largest operational loss in its history of $2.4 billion. Sharp incurred a net loss of $1.3 billion in fiscal 2008, ending March 2008, citing stagnant consumption, fierce competition and a surging Japanese yen.