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December 16, 2005

Flat-panel TVs Enter The Mainstream

6. EE Times' top ten stories of 2005

Courtesy of EE Times

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MANHASSET, N.Y. — Flat-panel TVs took major strides in becoming a mainstream product in 2005, thanks to aggressive marketing by TV makers and major production capacity expansions by display suppliers.

Sales of both liquid crystal and plasma flat screen TVs have soared as their prices have fallen, and display suppliers are pouring hundreds of millions of dollars into expanding or building next-generation fabs despite uncertain profitability.

Flat-panel TVs have been a saving grace for some troubled electronics companies during the holiday season. For instance, Sony Electronics said last month strong LCD TV sales gave the troubled company strong hope for the holiday season.

Market research firms report impressive sales increases for flat-panel TVs, stealing market share from CRT-based units. DisplaySearch Inc. (Austin, Texas) reported recently that LCD TV shipments rose 36 percent quarter to quarter and 156 percent year over year to 5.5 million units and a 13 percent share of the TV market. LCD TV revenues surged 37 percent quarter-to-quarter and 103 percent year-over-year to $6.5 billion and a 34 percent share of the global TV market the third quarter, up from 29 percent the second quarter and 19 percent in the year-ago third quarter.

In September, iSuppli Corp. (El Segundo, Calif.) raised its LCD TV shipment forecast for 2005 from 16.7 million to 17.1 million units. The firm also said average selling prices of LCD TVs would continue falling, with 30 to 34 in. sets to cost $1,548 the fourth quarter of 2005, down 22.5 percent from $1,997 the first quarter.

Rapidly falling prices and rising shipments are presenting a double-edged sword for LCD panel suppliers. iSuppli warned in November that prices drops, particularly during the holiday season, could lower profits for both LCD panel and LCD TV makers.

That presents a quandary for top-tier LCD panel suppliers such as Samsung, LG.Philips, AU Optronics, and Sharp Corp., all of continue to engage in a spending spree to build elaborate next-generation fabs to capture more market share.

Earlier in the year, Samsung Electronics executive vice president Jun Sook said the long-term risk of not having sufficient capacity outweighed the huge up-front capital investments.

As LCD suppliers transition to building larger screens for the flat-panel TV market, production challenges increase not only for display suppliers, but also suppliers of production and raw materials. For instance, glass makers such as Corning have also invested millions of dollars into plants able to fabricate larger sheets of glass.

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