Like the blind sages who touch the closest part of an elephant and come to wildly different conclusions about the animal’s appearance, it is easy for us to look at very different aspects of the LCD industry and come to different conclusions. And that’s fine - as long as we don’t confuse a part for the whole.

Ken Werner
Senior Analyst and Editor
of HDTV Retailer

This morning, a DisplayBank story reported that LG.Philips LCD (LPL) would introduce a 100-inch LCD-TV at CeBIT in March. The information was attributed to “an industry source.”

LPL and its Korean competitor Samsung can’t resist this “mine-is-bigger-than-yours” tussling, and Samsung (now joined by panel partner Sony) has had the world’s biggest LCD panel - at 82 inches - for some time. (Samsung SDI held the “biggest PDP” record until CES 2006, when Panasonic demonstrated a 103-inch PDP and LG Electronics tied with 102.) These world’s biggest panels and TV sets get a lot of free publicity for the companies involved and they’re useful for stretching the design and manufacturing departments, but they don’t add much, if anything, to the bottom line.

AU Optoelectronics’ announcement this morning focused entirely on the bottom line. President H.B. Chen and EVP Hsiung Hui announced that AUO intends to raise its share of the global LCD-TV panel market from 15% (of 27M panels sold in 2005) to 20% in 2006. Although AUO is the largest LCD manufacturer in Taiwan, roughly 60% of its panels have been for desktop monitors, a bit over 20% for notebook PCs, and only about 15% for TVs. This has allowed Taiwan’s #2 LCD maker CMO to out-produce AUO in the TV space.

But AUO’s motivation is not primarily machismo. The margin on TV panels is higher than on monitor panels, AUO expects to see the average selling price (ASP) of its TV panels increase this quarter while monitor and laptop ASPs decrease. It’s better to sell the higher-margin piece of glass than the lower-margin one.

AUO will be pushing 37-inch panels, which the company believes will be the sweet spot this year, as 32-inch panels were in 2005. Hsiung predicted that 37-inch LCD-TVs will be selling for 1500 USD by Christmas, down from 2100 USD in January 2006. He said the company plans to ship 100K 37-inch panels in March, up from 60K in January. The combination of 32- and 37-inch panels will account for 47% of the 1.8M TV panels AUO expects to ship this quarter.

This isn’t machismo. This is Taiwan’s largest tiger growling, low and confident.