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TV demand to trigger LCD price rise

Strong demand for flat-panel televisions is expected to cause LCD panel prices to increase this month and the next--and may perpetuate an LCD shortage.

Strong demand for flat-panel televisions is expected to cause prices on liquid-crystal display panels to rise in November and December and may perpetuate an LCD shortage into next year.

Market research firm iSuppli/Stanford Resources said Wednesday that demand for large-size LCD televisions is increasing rapidly, with panel sales expected to rise by 184 percent in 2003 to about 4 million units.

Panel makers are boosting production of 30-inch and 32-inch LCD panels to tap the LCD TV market, iSuppli/Stanford Resources said. But those production increases are coming at the expense of smaller-size panels, leading to a general shortfall of LCDs not only for televisions, but also for notebook computers and desktop PC monitors, the research firm said.

"The supply situation is extremely tight right now," Sweta Dash, an analyst with the research firm, said in a statement. "A lot of new manufacturers are entering the LCD TV market right now, including PC makers, and they are ordering huge numbers of panels from LCD suppliers. This is making the present shortfall even worse."

Computer makers Dell and Gateway have begun selling LCD televisions, and Hewlett-Packard is thinking about joining the market as well.

Average selling prices for large-size LCD panels rose 2 percent to 3 percent in October and will rise another 2 percent in November, according to iSuppli/Stanford Resources. The research firm defines large-size LCD panels as those with a diagonal screen width of 10.4 inches or more.

LCDs, which allow for a much thinner display compared with traditional cathode-ray tube displays, have become increasingly popular for televisions and computer screens. Worldwide shipments of LCD televisions hit 734,000 in the first quarter, up 223 percent from the first quarter of last year, according to market research firm DisplaySearch. And despite a general downturn in shipments of desktop monitors, shipments of LCD monitors surged in the first quarter of the year, DisplaySearch found.

In addition, sales of LCDs to the notebook computer market have risen sharply, according to iSuppli/Stanford Resources.

Dash said the two biggest makers of large LCD panels are LG.Philips LCD--a joint venture between LG Electronics and Philips Electronics--and Samsung. Sony and Samsung also plan to team up to make LCD panels.

The present shortfall in LCD supplies should lessen in the second quarter of 2004, as more capacity arrives to accommodate increased demand, according to iSuppli/Stanford Resources.