Rise in LCD-Panel Prices Squeeze PC Makers and Consumers

 
 
By Mark Carroll  |  Posted 2003-12-26 Email Print this article Print
 
 
 
 
 
 
 

Shifts in LCD panel production may bring changes to the product mix offered by PC makers to customers in the U.S. and Europe, analysts said.

TAIPEI, Taiwan—Shifts in thin-film-transistor liquid crystal display production here may bring changes to the product mix offered by PC makers to customers in the U.S. and Europe. Analysts said recently that manufacturing transitions and market demands will bring something unfamiliar to consumers of flat-panel displays: a rise in prices. For the first half of 2003, the dramatic fall in prices for LCD screens encouraged U.S. PC vendors to bundle these slimmer footprint displays with their new PCs. The market also boomed as consumers and businesses bought these flat-panel displays to replace the bulky CRT (cathode-ray tube) screens in existing systems. However, this increased popularity of flat panels has come at a time though when LCD manufacturers are in a period of technological transition and supplies look inadequate to meet this new demand.
For example, the second half of 2003 saw the average price of LCDs larger than 10-inches—the main component of flat-screen displays—go from $219 in the second quarter to $271 in the fourth quarter. A December report from Austin, Texas-based DisplaySearch predicted that this climbing trend is likely to slow somewhat but will continue into 2004, bringing prices as high as $291 for the first quarter of 2004.
The price rise for such a critical component sent U.S. PC makers scrambling to lock in supplies and cut back on some other components in order to meet pricing targets. For the short term, consumers though will have to bear the burden of the shortage of LCD panels, analysts said. Taiwanese companies are by far the worlds largest manufacturer of TFT LCD panels for PC monitors. By the end of 2004, Taiwan is expected to control 73 percent of the TFT LCD panel market for computer monitors, up from 2003s 65 percent, according to a recent report from the Taipei-based Market Intelligence Center, a division of the Taiwan Institute for Information Industry. In 2003, Taiwan companies began producing TFT LCD panels using so-called fifth-generation production equipment and processes that can accommodate larger glass panels. This efficiency allowed for a greater number of finished panels for use in PC monitors and notebooks as well as larger panels for LCD-based flat panel television sets.
Analysts said South Korean manufacturers are the worlds leaders in LCD production for televisions, which is the fastest growing, most profitable segment of the industry. Eyeing the these LCD-TV profits, the Taiwanese manufacturers are moving hard to enter the LCD-TV market. Still, it may be well into 2004, until the Taiwan companies can ramp the new, fifth-generation production to reach the efficiency levels now enjoyed by their Korean competitors. In the spring, eWEEK Korea offered a glimpse at new South Korean LCD manufacturing technology. To read the full story, click here. "South Koreas fifth-generation production already has a yield of more than 80 percent," MIC analyst Ann Hsu said. "The Taiwanese are facing a shortage of other LCD panel components such as color filters and their fifth-generation yield rates are very low." According to industry watchers, Taiwans production capacity for larger, top-end screens is now squeezed by this manufacturing transition as well as the internal competition from the decision to push towards greater television panel production. Yet at the same time, the flat-panel market is meeting an increased demand for LCD screens for notebooks. Demand for notebook computers in the third quarter of 2003 was greater than that for either LCD-based televisions or PC monitors, according to one analyst report. "Falling system prices, performance improvements and wireless awareness continue to bring notebooks to the attention of buyers, particularly consumers," said Charles Smulders, vice president at Stamford, Conn.-based analyst firm Gartner Inc. Next page: some display makers still focus on notebook screens.


 
 
 
 
 
 
 
 
 
 
 

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