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Friday, July 07, 2006

LCD TVs Still Getting Cheaper Faster Than Expected

By William Trent, CFA of Stock Market Beat

Although there is enough new evidence that the LCD panel market is cooling to justify new posts on a daily basis, we figure our readers have either got the message or just refuse to listen. We have cut back to 1-2 posts per week highlighting the news, while we wait for a profitable long investment idea from the group. Here’s the latest:

TFT LCD panel makers LG.Philips LCD, Samsung Electronics, AU Optronics (AUO) and Chi Mei Optoelectronics (CMO) will announce their financial results for the second quarter, starting from next week, according to the companies.

We’re betting the guidance gives investors heartburn.

The supply of 17-inch LCD monitor panels is expected to become tight during the middle of August at the soonest, according to industry sources.

So it has gone from tight in August to tight sometime after August. However, whether they qualify as tight or not the prices for the smaller-sized panels is at least stabilizing.
The average selling price (ASP) of 17-inch LCD-monitor panels has stabilized during the first half of July, while prices for LCD-TV panels have continued to decline during the period, according to WitsView Technology.

The ASP for 17-inch LCD monitors fell only US$1 to US$103 during the first half of this month, while the ASPs for 19-inch and 20.1-inch widescreen segments both dropped by US$5, WitsView pointed out.

Not so for the larger TV screens:

Following Sony’s rollout of low-cost LCD TVs in the Taiwan market, Taiwan-based Kolin on July 1 announced that the company has cut prices for its 32-, 37-, and 40-inch LCD TVs by NT$3,000 (US$92), according to the Chinese-language Commercial Times.

That’s about a 10 percent drop, and lit is likely to get worse:

Funai Electric plans to launch own-brand 20-, 30- and 32-inch LCD TVs later this month, with prices set to be 15-20% less expensive than those from major electronics makers, according to the Japanese-language Nihon Keizai Shimbun.

And for the big-screens:

Prices for 40-inch LCD TVs are expected to drop to US$1,983 during the fourth quarter of this year, according to today’s Chinese-language Commercial Times, citing data from DisplaySearch. The price gap between a 40-inch and a 37-inch LCD TV will further narrow to US$230 by 2007, the paper noted.

Prices for 40-inch LCD TVs were around US$2,349 during the second quarter of this year while prices for the 42-inch and 37-inch segments stayed at US$2,900 and US$1,902, respectively, according to a recent report from Hyundai Securities.

20 percent drops per quarter are faster than the industry can profitably sustain.
The World Cup promised to boost sales of flat-panel TVs, but as the games wind down, reality is settling in.

We’re sure the Tour de France will help, though.
Prices for flat-panel TVs have been slashed to new lows in Taiwan and Japan amid heated competition in the LCD TV and PDP (plasma display panel) TV markets, according to TV makers.

The ASP (average selling price) per inch for flat-panel TVs in Taiwan have reached the NT$1,000 (about US$31) barrier, with the price dropping to less 5,000 yen (about US$43.6) in Japan, the TV makers said.

If the LCD supply doesn’t do it, the Plasma supply will.

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