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Tuesday, November 28, 2006
Shift to finer, Larger TVs Favors LCD Over Plasma


Plasma TV suppliers such as Panasonic, already outnumbered by the rival LCD camp, are expected to lose further ground as LCD TVs encroach on the 40-inch-class market, a plasma stronghold.

Growing demand for higher-resolution models is also giving a leg up to liquid crystal display (LCD) TVs, promoted by Sony and many others in Taiwan and South Korea, paving the way for consolidation among plasma companies, analysts say.

It is technologically difficult and often costly for plasma makers to give a full high-definition function to models with a screen size of less than 50 inches, while LCD TV makers are aggressively promoting full HD models in that segment although prices are generally higher.

"This Christmas season probably is the last chance for (plasma TV makers) to promote 42-inch models. By this time next year probably there will be no price difference between plasma and LCD TVs," Credit Suisse analyst Wanli Wang said.

With little price difference, most people would choose LCD TVs because of their higher resolution, Wang said.

He expects LCD TV prices to fall 30 percent or more in 2007, compared with a decline of 15 to 20 percent for plasma TVs, due to ample LCD panel supplies.

Sharp in August started LCD production at its Kameyama No. 2 plant, the world's first to cut panels from eighth-generation glass substrates, which can yield eight 40-inch-class panels, compared with just three panels from the sixth-generation glass used at its first Kameyama plant.

DisplaySearch forecasts that the plasma TV market will start shrinking in 2009 after hitting $24 billion in 2008, while it sees LCD TV demand reaching $75 billion in 2008 and $93 billion in 2010 - a trend that will likely make companies offering both LCD and plasma lines think twice about their strategy.

South Korea's Samsung and LG as well as Japan's Hitachi offer both LCD and plasma TVs. Matsushita also sells both products, although it heavily bets on plasma.

"The larger panels become, the more important response speeds for moving images are. In this point, plasma still excels," Matsushita President Fumio Ohtsubo told reporters last month.

Plasma panels, especially 50-inch and larger ones, do excel LCDs in some aspects of picture quality, but the sheer size of the LCD camp will help LCD panels overcome whatever drawbacks they have in a timely manner.

About 80 percent of global flat screen R&D spending is being allocated to LCD panels, and the remaining 20 percent to plasma and some other technologies, Credit Suisse's Wang said. In a potential sign of slowing plasma TV demand, Japan's top three plasma TV makers -- Matsushita, Hitachi and Pioneer -- last month cut their unit sales forecasts by 8 to 20 percent for the year to March.

With the 40-inch-class market gradually taken over by LCD TVs, plasma models need to migrate to the market for 50-inch TVs and above, but demand is not as well developed there, analysts say.

"The United States accounts for more than 70 percent of demand for 50-inch plasma TVs and larger. In other words, there is virtually no 50-inch-class plasma TV market outside the United States," DisplaySearch director Hisakazu Torii said.

Although demand is limited, competition is not necessarily mild. Instead of LCD models, plasma TVs will be pitting themselves against another strong rival, rear-projection TVs.

"If you take a long-term view on the plasma industry, prices are coming down and revenue will not be growing that much. That makes aggressive investments for future growth difficult," iSuppli Japan director Junzo Masuda said.

"The number of players will likely be getting smaller and smaller," he said.


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