Flat Panels Ramping Up

When will prices drop to truly affordable levels for flat-panel televisions?

That's a question asked every day of electronics salesfolk. The short answer: production problems and raw component shortages. Those are the primary reasons why supplies of flat-panel TVs—especially LCD sets, which account for 82% of the market - haven't flooded into stores, ushering in a new wave of price reductions.

LCD sets are about "six times more expensive per inch of screen size than ordinary tube TVs, twice as expensive as projection TVs, and 25% more expensive than plasma TVs," according to CLSA Asia-Pacific Markets, an investment research firm in Hong Kong quoted by Evan Ramstad in an in-depth analysis of the problem in the May 27 issue of The Wall Street Journal. That may change as new plants come online and engineers develop more efficient ways to make the fragile glass. Ongoing challenges include making ever-larger panels, creating backlights that evenly illuminate the LCDs, and building color filters with natural appearance.

Although several major manufacturers have broken ground on new factories, estimated to cost $2 billion to $3 billion each, and have signed unprecedented sweetheart deals to boost production, consumers have yet to feel the benefits. Dong Hun Lee, senior vice president of LCD marketing at Samsung Electronics Co., told Ramstad that he expects prices to remain stable through the end of this year, but that they should begin to drop next year as seven new Asian plants go into production.

Consumers have seen hints of that in incremental price cuts for LCD sets, but nothing dramatic. Predictions for next year, however, are encouraging: Today's $3k–$4k 30" LCD-TV may go for as little as $2000 by December 2005. Discount chain Costco has already broken the $2000 limit with a standard-definition set selling for $1799.

The market for flat screens appears almost unlimited: research firm iSuppli Corp. of El Segundo, CA projects worldwide LCD TV sales to double this year to 10.4 million units. Another research firm, DisplaySearch, predicts global sales of LCD panels should rise to $47.7 billion this year from $32.1 billion in 2003.