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Monday, August 14, 2006

LCD Market Update

By William Trent, CFA of Stock Market Beat

Regular readers may have noticed a slow-down in our posts on the LCD market - truth be told, the decline in share prices and recognition that there is too much capacity have left conditions in a sort of no-man’s-land. We are no longer completely bearish but not yet bullish because slowing consumer spending could thwart the expected sales boost for the coming holiday season. So we watch and wait.

Some manufacturers are considering converting some of their production to solar cells to ease competition.

Kolin, which makes the Olevia brand of LCD TVs, said its LCD-TV shipments to the domestic and overseas markets totaled 260,000 units in the first seven months of this year, up 44% compared to the same period last year.

Global large-size panel shipments increased 5% to 61.5 million units in the second quarter of this year, boosted mainly by TV panel sales with a 12% sequential growth and a 6% increase in monitor panel sales, according to research firm WitsView Technology. 5% sequential gains - a little better than 20% annually - will not support the massive investments in new capacity being made.

AU Optronics (AUO) is now aiming for the 40-, 42-, 46- and 47-inch LCD-TV markets, according to the company.

AUO has successfully turned on its first 42-inch LCD-TV panel produced at its 7.5 generation (7.5G) TFT-LCD plant at the beginning of August. The 7.5G plant, which is set to enter volume production in October, will also begin producing 40-inch LCD TV panels, the company said.
AUO’s 7.5G glass can be cut into six 46-, six 47-, eight 40- or eight 42-inch TV panels, AUO said. Following in the steps of LG.Philips LCD, AUO’s 7.5G glass size is 1,950×2,250mm.
In fact, an executive at AU Optronics suggests consumers could find real bargains this holiday season, assuming they are still buying anything at all.

Prices for low-end 37-inch LCD TVs may fall below US$1,000 before year-end and the 37-inch segment will see its share rise significantly throughout the period, according to Hsiung Hui, executive vice president of AU Optronics (AUO), who spoke at a recent investors conference.
Prices for LCD TVs have not fallen at the same pace as that of LCD TV panels in the first half of this year since it takes around one quarter for the end product to reflect the price reduction at the panel end, Hsiung said.

Since end-user demand has not been adequately stimulated, TV panel prices have fallen significantly during the first half of this year, he indicated, adding that TV prices will now reflect the price trend.

Meanwhile, those manufacturers just keep pouring on the capacity.

Sharp’s Kameyama (Mie Prefecture, Japan) plant No. 2 will begin operation for eighth-generation (8G) LCD panels this month, with large-size LCD TVs using the panels to reach the market in September, the company announced.

The plant will use 8G glass substrates (2,160×2,460 mm), about double the size of a 6G substrates (1,500×1,800mm) utilized by the company’s Kameyama Plant No. 1, a facility that produces LCD panels for 30-inch class LCD TVs. The 8G glass substrates are suited for LCD panels utilized in 40- and 50-inch LCD TVs, according to Sharp.

Perhaps the real bargains will arrive in time for the 2007 NBA finals.

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