Citing recent news such as the LG.Philips announcement of major losses for the second quarter of 2006 and scaled back plans for new production line, as well as news that Taiwanese manufacturer are experiencing reductions in production and worker furloughs, research firm Pacific Media Associates is wondering if the LCD TV market may be headed for a bit of a slow down.
The group reports that LCD panel inventories are high, and that some in the industry fear that prices will fall even further as manufacturers try to empty their warehouses. “The LCD industry is dealing with the results of exuberance that may have been a bit irrational,” says to Pacific Media Associates vice president Rosemary Abowd. “A number of industry sources have been predicting breathtaking annual growth rates. As a result, manufacturers have embarked on an arms race of expanding production capacity. The attitude seems to be that an oversupply is acceptable so long as it is your company’s panels that are being sold.”
For 2006, Pacific Media is forecasting 4.4 million flat panel TVs 30-inches or larger — both plasma and LCD — will be sold. Says William Cogshall, president of the group. “While this is a healthy increase of 69 percent over our observed 2005 numbers, it is still considerably less than the triple-digit growth forecast by some sources. However, if you add the expected 3.2 million rear projection sets, you get a total of 7.6 million sets in the $800-plus range. The CEA’s forecast calls for a total of 29.0 million TV sets for 2006, which means that 26 percent would be have to cost more than $800, up from the 17 percent for 2005. This seems extremely unlikely, so something has to give. In fact, several factors will likely change substantially — for the worse — during the remainder of 2006.”