Insight’s Daily Outlook

Every weekday morning, Insight Media’s Steve Sechrist and Ken Werner have a conference call with Jamie Townsend and Alex Hamilton of IM’s financial analysis partner, Townhall Proprietary Research. We screen the news of the display and consumer electronics industries, and we figure out what matters and how to use it. We do this to help in our editorial process and to support Townhall’s analysis on the financial impact of the news. Now, we’re sharing those insights with a wider community.

Our goal is to simply – and very briefly – tell you what we think is interesting or important from today’s headlines. This is your opportunity to see how we look at events each day and how we judge their impact. It is your chance to get an early jump-start on an important event – with a little guidance from the experts at Insight Media.

Welcome to Insight Media’s Daily Outlook.

Ken Werner
203-831-8464
kwerner@insightmedia.info

The Best Size Gets the Prize

by Steve Sechrist

Steve Sechrist
Projection Industry and
Editorial Expert

December 20, 2005 - As LCD maker Samsung and S-LCD partner Sony continue to ramp their gen 7 production-recently announcing monthly capacity increases on its two lines to 90K and 75K glass substrates respectively, things are beginning to heat up downstream, with the narrowing price gap between 37-inch and 40-inch LCD-TVs.

For instance recent price cuts brought a Samsung 40-inch LCD panel to $900-narrowing the premium over 37-inch displays to just $100. With the capacity plans moving forward, word on the street is that Samsung is aggressively targeting this space in a head-to-head battle with PDPs 37- and 42-inch technology, attacking a niche to draw away customers from both segments.

For Samsung / Sony, the move is a solid bet. LCDs can claim the resolution high-ground in this size category with a WXGA (1366x768) resolution display that to date can only be matched by the larger, more expensive PDP 50-inch panels. The smaller HD plasma sets typically have resolutions of 1024x768-an XGA vintage that harbors back to the PC monitor market.

For its part Taiwanese maker AUO said it will remain competitive against any 40-inch size price drops, and the company is planning capacity ramp of their gen 6 fab line to 90K substrates/month by mid-06 and 120K by the end of next year.

This investment is triggering the next screen size battlefield as LCD makers move their focus from the 32-inch category to the 40- to 42-inch range. Higher capacity coupled with higher yields in the 40-inch size category will translate into lower cost panels. This is putting price pressure on the 37-inch category as they seek to sustain a reasonable price advantage over the 40-inch displays.

This may have come none too soon for the LCD guys as hefty price cuts in the PDP space and the relative impression that plasma technology handles fast motion video (i.e. sports) and delivers richer colors better than LCD, have kept the technology on the top of the large display heap. In the Korean market where 37-inch PDP sets are sold head-to-head against LCDs, the plasmas are dominating. Sales are up from just 55K PDP-TVs in 2004 to a solid 200K units this year - 85% of the total flat TVs sold in the 37-inch and above category. Next year, 37-inch and above plasmas are expected to outsell same size LCDs six to one (360K 37-inch PDPs to 60K 37-inch LCDs) according to a recent Displaybank article.

While this may just be one data point-as we come into the final stretch of the Christmas selling season it offers perhaps a clear message for LCD makers that plasma will not give up market share easily-and to gain a production advantage over PDP, the LCD makers need yet another round of investment to compete.

For now the question remains, can the crystal cycle provide LCD-TV vendors the low cost high quality displays needed to go head-to-head against cost reduced PDPs as the battle for the large-display king of the heap continues well into 2006?

Insight Media, 203-831-8464, steve@insightmedia.info

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Insight Media (www.insightmedia.info) provides a full array of market research, news, analysis and consulting services for the display industry, with special attention to projection products. Tracking the complete supply chain from components to finished products and the distribution channels, Insight Media follows technologies, markets, business and trends in displays and display-related application markets. Broad coverage is offered through our newsletters and conferences with in-depth analysis available via our reports and consulting services. Insight Media has a world-class team of industry analysts and associates to provide comprehensive coverage and analysis of the display industry.

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