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.