This is the way it was supposed to be: A slight oversupply of LCD-TV panels in the first quarter of this year would turn into a significant shortage toward the middle of the year, fueled by the Beijing Olympics and a new-TV buying spree by U.S. residents in advance of the dreaded transition to digital terrestrial broadcasting on February 17, 2009. There would be a trend to larger average screen sizes, and the LCD panel shortage would be a boon to PDP makers, who would enjoy a greater increase in unit sales than otherwise anticipated, and might even see some significant profits.
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Then the end of the U.S. housing bubble hit, which triggered the sub-prime mortgage crisis, which is reaching its tentacles into more and more corners of the U.S. and global economy. Updated market forecasts early this year were based on pre-crisis industry sales estimates, so they remained upbeat. Now, April figures are coming in, and projections are being adjusted. In addition to the U.S. economy, adjustments are required to account for the effects of serious snowstorms in China in Q1, which has required inventory adjustments that are fueling cut-throat competition among LCD-TV vendors and depressing prices.
DisplaySearch’s April figures say TV-LCD prices are trending downwards because of continuing oversupply, while tight supply of monitor and notebook panels is pushing prices up in that segment, after price drops in the first quarter. According to DisplaySearch, panel makers are not shifting much of their Gen 6 capacity from the TV to IT segment, essentially allowing the IT panel shortages that should start this month.
Digitimes noted that demand from top LCD-TV vendors for lower-price panels to fuel Q2 marketing campaigns in advance of the Olympics would further suppress TV panel prices, and could also motivate panel makers to shift capacity to the IT segment, in contrast to DisplaySearch’s assessment.
Industry sources told Digitimes reporters that sales may not pick up in April, and an oversupply could occur in the 32-inch segment because Sharp has increased its 32-inch output at its Gen 8 plant from 400K to 600K.
So, earlier predictions of dire shortages of 32-inch LCD-TV panels - with supply being as much as 30% short of demand - are now moderating. Previous estimates put 32-inch LCD-TV shipments at 32 to 35M units for 2008.
But the outlook is still uncertain. The predicted robust sales of larger size LCD-TVs of 40 inches and over are not panning out, which is encouraging Sharp and some other panel makers to shift production to the 32-inch segment, figuring that some consumers will downsize their purchases rather than defer them completely. First-tier set makers, including LG, Samsung and Sony, are increasing their production of 32-inch sets.
If the LCD-TV panel shortage doesn’t materialize, plasma display panels will be affected. PDP suppliers still expect PDP-TV shipments to grow in 2008, but they may not be able to reach their shipment goals. PDP suppliers see 2008 as a crucial year, in which a failure to reach their goals could signal "the death of the PDP market," industry sources dramatically told Max Wang and Rodney Chan of Digitimes.
What are those goals? Matsushita has planned to ship over 7M units; Samsung SDI, over 6M units; and LG Electronics, over 4M units, the sources said. The Digitimes sources also said that inside the PDP industry there have been strong arguments concerning whether companies should invest in the segment.
The suppliers generally agree that if they can reach their shipment goals for 2008, they will be able to continue expanding capacity based on market demand; but if shipments fall short, expansion will stop and the suppliers will have to accept the gradual phasing out of PDP TVs.
However, the plasma contingent is now able to compete in the hottest segment of the high-definition flat-panel TV market: 32 inches. Samsung SDI will start producing 32-inch PDP-TV panels in Q3, and LGE is expected to expand its 32-inch PDP-TV sales to markets beyond China, where a Q4′07 introduction was very successful.
What’s the next thing to look for? Let’s see if the anticipated Beijing bubble turns out to be another World Cup bust.