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Taiwan surges into LCD TVs

Taiwanese companies are accelerating efforts to manufacture televisions using LCD screens. "Digital TVs will be larger than our notebook business," one executive says.

TAIPEI, Taiwan--Several Taiwanese companies are accelerating efforts to manufacture televisions using LCD screens, a technology they hope will displace plasma TVs for customers wanting thin displays.

Liquid-crystal displays today are chiefly used in computers, especially notebooks, but consumer electronics companies now believe the screens are ready for television use as well. Among the advocates are Teco, which was showing LCD TVs as large as 40 inches diagonally at the Computex trade show here, and , the third-largest maker of LCDs in the world, according to analyst firm DisplaySearch.

"Digital TVs will be larger than our notebook business in three years or four years," AU Optronics Chief Executive K.Y. Lee said in an interview here. Lee is also CEO of BenQ, a partial owner of AU Optronics that buys its displays and builds them into notebook computers, standalone monitors and LCD televison sets.

AU Optronics is building a sixth-generation LCD production line so it can manufacture LCD TVs, Lee said. Making large displays has been technologically difficult, but with the new production line, its 32-inch, 37-inch and 40-inch LCD TVs will be economical, Lee said.

It's no surprise that the Taiwanese are interested in this market. A total of 734,000 LCD TVs were shipped in the first quarter of 2003, and about 4.9 million panels for LCD TVs will be sold this year, according to DisplaySearch.

LCD manufacturing has been an up-and-down market, with capacity that swings from too much to too little, but LCD makers currently are increasing capital investments, DisplaySearch said. Demand for panels 10 inches and larger will outstrip supply in the last nine months of 2003, letting panel makers charge more for their products, the firm said.

Among display technologies, LCDs consume relatively little power but aren't easily viewed from an angle and contrast can be low. They're found in a range of products from portable PCs and standalone desktop screens to wristwatches and pocket calculators. Plasma screens, meanwhile, have caught on at the high end of the TV market, but have prices to match.

Teco makes 30,000 LCD TVs per month at its Taiwan manufacturing plant, but is opening two factories in China that will allow an expansion to 90,000, said Ben Cheng, Teco's chief marketing officer.

"There are many competitors entering this field quickly," he said, but the company believes it will be able to keep an edge over its competitors. The company's 40-inch LCD TV will go on sale in January, he said.

Teco began selling its LCD TVs in Taiwan at the beginning of 2003, in Japan in April, and will expand to Europe and the United States in October, Cheng said. In Europe and the United States, Teco has partnerships under which other companies put their brand names on its TVs.

A 30-inch model costs about $2,000 in Taiwan and $2,500 in the United States, Cheng said.

Smaller companies are eager to get deeper into the action as well. Plasma TV maker Sampo Technology now sells three 20-inch LCD TV systems. And memory module maker Silan has launched an LCD TV line called Egami.

Silan makes only about 2,000 to 3,000 LCD TVs per month, but the company isn't worried about its larger Taiwanese competitors. "We're just a new beginner. So far it's OK--there's room for us," said Thomas Wu, assistant vice president for sales and marketing.

Taiwanese companies aren't alone in their interest in LCD TVs, however, and two Asian electronics giants in particular pose a competitive threat. Sony, the top consumer electronics company, confirmed this week that it's in discussions about a possible investment in the LCD business of Samsung, the top LCD panel maker.

BenQ's Lee said he isn't worried about the possible Sony-Samsung alliance, saying it could drive consumer electronics companies in competition with Sony away from Samsung and into deals with AU Optronics, Lee said.

The other competition, of course, is with traditional cathode-ray tube (CRT) displays, the bulky units that come with most desktop computers and that constitute much of a typical television set.

An LCD costs 3.5 times as much as an CRT, Teco's Cheng said, but he believes the LCDs will be appealing because they take up less space, consume less power, have a brighter image and can be used better with computers.