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iSuppli predicts shortage of flat panels

In the fourth quarter, demand for high-quality liquid crystal displays will exceed supply by 4.3 percent, the research company predicts.

The global demand for large, high-quality flat-panel displays will outstrip supply by 4.3 percent in the fourth quarter, research company iSuppli/Stanford Resources said Thursday.

A study released by the El Segundo, Calif.-based company found that large TFT LCDs (liquid crystal displays) will be much in demand because of increased spending associated with the holiday season. iSuppli defines a large screen as one that is more than 10 inches in diagonal length. The use of TFT (thin-film transistor) technology generally indicates a higher-quality display.

If the company's prediction is correct, the fourth quarter will be the first of the year in which demand exceeds supply.

In the first quarter, flat-panel suppliers shipped 28.5 million units, a drop of 1.5 million units, compared with the previous quarter. iSuppli estimates that in the second quarter, supply will have exceeded demand by 6 percent. In the third quarter, the company said, supply will exceed demand by 5.4 percent.

Eight new factories expected to begin production in 2004 will increase the worldwide supply of these displays. As a result, the first three quarters of 2005 will have an adequate supply of flat panels, the company said, but another shortage will surface in the fourth quarter, though with a reduced intensity of just 0.9 percent.

The company also recently predicted that shipments of flat-panel televisions will surge 10 times over the next five years, with annual sales hitting 40 million by 2008.