Adding fuel to the already hot flat panel display market, Matsushita announced today they are targeting the coveted 5000 yen / inch price mark (around $43) a full one year earlier than previously expected. That would put the price of a 50-inch PDP from the number one Japanese vendor at a cool $2150 in retail, a price that could only fetch a an equally sized rear projection display just one year ago.

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly &
Microdisplay Report

The Matsushita announcement promises to place high demand flat panel TVs well within reach of a majority of new buyers. Fueling demand for HDTVs is a combination of growing HDTV content, sports broadcast mega events like the World Cup and the looming analog cut-off date.

Lower prices are being enabled by lower costs, which will be achieved by reduction in the cost of materials and components, but also by major expansions in fabrication scale. At the Flat Panel Investment Conference in New York last week, Displaybank VP Kenny Kim told attendees that the market research firm has now increased the expected sales of PDPs to 30M in 2010, up a whopping10M from its forecast six months ago. Such an increase was done due to the strength of sales of PDP-TVs and the aggressive investment and production plans of market leaders like Samsung SDI, LG Electronics and Panasonic

Matsushita (Panasonic) is one of the three PDP tigers who, along with Korea’s LGE and Samsung control 87% of the global market-cranking out an astounding 200K panels per month each, with further expansion plans in full swing. The planned expansion by the big three would boost PDP output totals to over 11M units in 2007.

Today’s news is sure to rankle the likes of major LCD suppliers like Sharp, Sony / Samsung and LG.Philips LCD who all committed to the higher profit 37 to 50-inch market. Case in point - Samsung and Sharp both announced investments of $2.5B each for Gen 8 manufacturing facilities that optimize production of large size 40- 50-inch displays.

The $43/screen inch (5000 yen) number has been mentioned by analysts before as a future target price but this move by Matsushita can be seen as a direct challenge to the LCD industry, facing a more complex manufacturing process that requires heavy capital investment to gain economies of scale production to keep up.

Matsushita may also be betting the odds as higher manufacturing complexity and/or a potential strain on the delicate LCD supply chain also can mean higher risk for LCD manufacturers, where even a slight drop in production yield can make the difference between profit and loss for the manufacturer.

But beyond the big players, the new price cuts could also push some already weakened PDP suppliers over the edge. Both Pioneer and FHP have been hurt by past increased price pressures, watching market share dwindle to just 12.7% in 2005, being unable to match the efficiencies of the big three PDP suppliers. Meanwhile CPT, Formosa Display and Orion PDP all chose to exit the market rather than make the required investment to stay in the running.

The Matsushita announcement leaves little doubt that PDP will not cede the large display TV space without a knockdown drag-out fight, perhaps to the finish of the smaller players. -SS