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Flat-panel market thins out

Reduced supply for the raw materials that make popular flat-panel monitors may keep prices higher, a report says. The holidays, however, may bring some relief.

The picture for flat-panel monitors is dimming after a strong first quarter, according to market research firm DisplaySearch's quarterly report.

Worldwide shipments of liquid crystal display monitors increased 17 percent in the first quarter compared with the same period last year, hitting a record high of 7.47 million units. But subsequent lower-than-expected supplies of LCD panels--the primary and most expensive component in flat-panel monitors--slowed shipments, causing a rise in prices and a drop in sales.

Monitor shipments are expected to rise only 7 percent in the second quarter, and only 3 percent in the third.

"April and May showed strong shipment numbers," said DisplaySearch analyst Ross Young. "But there was a slowdown in June because of higher prices...The trend in shipments is exactly following the pricing trend. We saw this in early 2000, and we're seeing it again now."

But with new panel manufacturing plants coming online, prices should once again come down for consumers.

"Panel prices are falling, and every supplier is expected to lower prices, especially for 15- and 17-inch displays," Young said. By the holidays, he said, prices for 15- and 17-inch panels could drop by $15 to $20--and even more for larger-sized panels--and that should translate to similar price drops for monitors.

LG Philips has opened the doors to its fifth-generation manufacturing plant, and Samsung is scheduled to go into volume production no later than early next year.

The glass sheets used in the new LG Philips plant will be larger than those used in previous generations of plants, so the company will be able to produce more monitor panels out of one sheet. This lets the company produce more products for less money, making for lower consumer prices and potentially greater sales volumes. LG Philips will focus on producing more 15- and 18-inch LCD monitors, 15-inch notebook PCs and larger LCD TVs.

The dominant panel size has been 15 inches, but 17-inch panels have been growing in popularity. Shipments of 17-inch monitors grew 60 percent, to more than 1.35 million units, in the first quarter of 2002. The larger monitors are expected to overtake their 15-inch counterparts in the second quarter of 2004.

Companies selling flat-panel monitors have been noticing the popularity of increasingly larger displays and have been offering new sizes.

Dell last week announced a new 18-inch monitor and, according to DisplaySearch, took over the No. 1 worldwide market-share position for flat panels. The company was also the No. 1 seller of 17-inch flat panels. Dell benefits from the fact that it not only offers monitors as standalone products, but also bundles them with PCs--a market the company dominates.

Samsung was No. 2 in market share for LCD monitors, NEC-Mitsubishi was No. 3, Fujitsu was No. 4 and Sony was No. 5.