New plants, weak demand cause LCD price drop

Users should see bargains on some products that use LCD screens, such as LCD-TVs, because prices are falling.

A string of new LCD factories being built, combined with slow demand for notebook and desktop PC screens, caused LCD prices to fall during the first three months of the year, and the downward trend is expected to continue, vendors and analysts said.

Falling prices for LCD (liquid crystal display) screens should help ensure that users find bargains for new monitors, laptops and LCD-TVs this year, since the screen is among the most expensive components in those products. The price declines are also causing vendors to improve picture quality to catch users' eyes and draw them away from competitors.

Makers such as LG.Philips LCD and Samsung Electronics, the world's two largest LCD producers, are ramping up production at state-of-the-art factories, while rivals continue to add new lines at existing plants. Other big players, such as AU Optronics in Taiwan, will bring new plants on line later this year, which should help keep LCD prices tame.

"The biggest impact from the new plants will be in the first part of this year, but there will be some impact throughout the year," said Frank Lee, an LCD industry analyst for Deutsche Securities Asia in Taipei.

The new LCD plants were built largely to keep pace with demand for LCD-TVs, which have been among the hottest selling items this year. Cutthroat competition among LCD makers has also been a boon to users, ensuring steadily falling prices for the past few years, even as screen sizes increase.

For example, prices for 42-inch LCD screens that will be delivered to TV makers in the second half of April fell by $US35 each since the end of March, to an average of $US890, according to WitsView Technology, an industry researcher. Prices for 19-inch panels for PC monitors fell $US5 to an average $US160.

Average selling prices for LCD panels at AU Optronics fell nearly 12 percent quarter-on-quarter by the end of March, and the company forecast continued declines into the second quarter, according to executives at its first quarter earnings conference on Thursday.

"Screen prices have remained weak in April but should stabilize in May or June," said Hsiung Hui, executive vice president of strategic planning at AU.

The company expects the price of screens used in desktops and laptops to drop by around 10 percent quarter-on-quarter during the April to June period, while LCD-TV screen prices will decline by a smaller percentage, in the mid single digits, it said.

The outlook on falling prices has been echoed by AU's larger rivals in the industry.

LG.Philips said its sales declined in the first quarter compared to the fourth because of a decline in the average selling prices in LCDs destined for laptops and desktop monitors, with an overall price decline of around 10 percent for all LCD screen products.

The South Korean company, a joint venture between LG Electronics and Koninklijke Philips Electronics, said its average selling prices in the current quarter will drop by a mid- to high-single digit percentage compared to the end of the first quarter.

The company is increasing production at a state-of-the-art LCD factory in Korea, as is rival Samsung. AU is building a similar plant in Taiwan that it expects to be in production by the third quarter of this year. LG said it would produce mainly 42-inch and 47-inch screens at the plant, aimed at the LCD-TV market.

Other LCD industry competitors are also increasing production to keep up with demand for LCD-TVS. On Wednesday, S-LCD Corp., the LCD panel manufacturing joint venture of Sony and Samsung, said it plans to invest a further $US238 million to expand production at its factory in Tangjeong, South Korea.

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