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LCD shortage in 2000?

A shortage of liquid crystal screens will hit in 2000, affecting notebook makers and the market for flat-panel technology, a study finds.

Stephen Shankland Former Principal Writer
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Stephen Shankland
2 min read
A shortage of liquid crystal screens will hit in 2000, affecting both notebook makers and the burgeoning market for flat-panel displays, according to a new study.

By 2000, there will be a shortage of 2.66 million LCD screens, according to a quarterly survey of flat-panel and notebook manufacturers from DisplaySearch, which may result in higher notebook prices and stifled LCD growth in the desktop market.

The shortage "could push notebook prices upwards," said Ross Young, president of DisplaySearch, noting that component cost reductions will have to offset any price increases on LCDs.

High-end desktop PCs have been targeted as a potential growth area for flat-panel displays, especially as prices have come down under $1,000. The number of desktop LCD screens is expected to more than double in 1998, increasing from 430,000 to 1.06 million, according to the study. That growth rate of more than 100 percent should continue in 1999, with desktop LCD screens increasing to 2.186 million.

But by 2000, LCD desktop display growth will slow to about 25 percent, according to the study, because tight supply will halt the steady price decreases. The shortage is a consequence of a mismatch in production capacity and manufacturer demand, Young said.

In 1998, demand for LCDs was lower than expected. The result: a glut of displays on the market, declining LCD prices, financial losses for LCD manufacturers, and decreasing investments in 1999 to meet the demand in 2000.

Also, LCD manufacturers were hit by the financial crisis in Asia, which has restricted the supply of money needed to add new LCD manufacturing capacity, Young said.

The LCD industry is dominated by Japanese and Korean manufacturers.

"There really is no other source of supply other than Taiwan," Young said. Although four new Taiwanese manufacturers plan to enter the LCD market in 1999, "We still don't think that will be enough capacity," he said.

While the news might be bad for consumers and computer makers, it could help the display manufacturers themselves.

"The flat-panel industry has been hurting financially the last 18 months," suffering from an oversupply and resulting price drops. "I think this shortage will allow them to get healthy and regain some profitability, or at least reduce losses."

Although firm data isn't yet in, it's likely that the LCD shortage will taper off in 2001, he said. "In 2001, we see enough capacity to come on line to end the shortage," Young said.

At least one notebook maker discounted any effect of a possible shortage. IBM does not foresee any shortages in displays for its ThinkPad line of portable computers, said James Scailes of IBM, because Big Blue has a stake in its suppliers and can control its own supply.