Spending spurt seen among LCD makers
Manufacturers of liquid-crystal displays are expected to ramp up production next year, eventually leading to lower prices.
According to a report released Tuesday by market researcher DisplaySearch, makers of flat-panel monitors will spend a record $8.3 billion on equipment in 2004. That would build on this year's expected growth of 25 percent.
"This has several implications," said Charles Annis, a research director for DisplaySearch. "One is it shows a real dedication by manufacturers to pursue LCD television. It means they are confident (LCD) will be the leading flat-panel display technology. Right now, people see a lot of plasma flat-panel TVs on the market. But we'll start seeing 40-inch LCD TVs and they'll be much cheaper."
Demand is strong for LCD monitors used in notebooks, desktop PCs and TVs, according to the report. As a result, several manufacturers are opening new fabrication plants in late 2004, rather than early 2005.
"Panel prices are rising and all the panel makers are rushing to announce they're building new fabs and are out raising money from investors," Annis said.
Until the new plants are online, prices are expected to climb slightly. Manufacturers expect a 7 percent increase in average selling prices during the third quarter and fourth quarters of this year, according to DisplaySearch.
Additionally, manufactures are expected to benefit from a 10 percent decline in production costs this year as they shift to larger substrates, according DisplaySearch. The larger the substrate, the more LCD panels can be produced from a single piece of the material.
As an example of the increased interest in LCD manufacturing, consumer electronics giant Sony confirmed on Monday that it is looking to invest in an LCD partnership and has been talking with several companies, including rival Samsung.
Building LCD manufacturing plants is costly and considered a major gamble in the volatile LCD market, leading many companies to partner with others. LG.Philips LCD, which alternates with Samsung as the leading manufacturer, is a joint venture between LG Electronics and Royal Philips Electronics.
While Sony's CRT (cathode-ray tube) TV business has been ailing, consumers have shown an increased appetite for LCD TVs.