eLifespaces

News from overseas forecast falling LCD prices due to a variety of global factors including too much supply in a slower-than-expected European and U.S. economic recovery. LCDs are used in many of today’s electronics, ranging from computers and PDA to high-definition television sets.

When first signs of economic recovery were seen, LCD manufacturers increased [43% to $16 billion] capital spending, putting LCD-panel production in overdrive. When matched with a weak consumer spending world-wide for electronics, excess panel supply as retail inventories rise began (and will continue) forcing prices down. The weaker-than-usual prices are starting to hit margins of LCD makers, including LG Display Co., AU Optronics Corp., Samsung Electronics Co. and Sharp Corp.
Highlights cited by Nikkei.com:

• Taiwanese LCD companies' factory-utilization rates are down to about 80% to 85% currently, while Korean LCD makers' utilization rate is around 90% to 95%;
• LCD TV retail inventories stood at six to nine weeks on average in July, which is on the high side;
• Sharp, maker of panels as well as Aquos-brand LCD TVs, said it expects LCD panel prices to continue to fall as it sees uncertainty in the market;
• Samsung had forecast that its average selling LCD panel prices are likely to remain flat in the third quarter compared to the second quarter, but there is potential for a high-single-digit percentage decline for various models, following a midsingle digit percentage increase in average selling prices in the second quarter.

Bottom line… lower panel prices on LCDs may hurt the manufacturers, but they are good news for set makers looking to lower overall component costs. If prices fall sharply, set makers are able to transfer the lower costs to consumers. And this is the basis for forecasting falling prices on LCD televisions.