In Depth

HDTV Supply May Leapfrog Demand

By Danny King

Are the world’s largest high-definition television makers one step behind demand?

That’s what some industry analysts are asking after companies including Sony and LG Electronics announced plans for new liquid-crystal display production lines, even as worldwide LCD growth shows signs of tapering off.

First-quarter worldwide unit sales of LCD TVs, almost all of which are high definition, increased 45% to 46.1 million units from a year earlier. While that rate dwarfs the 20% growth in plasma TV unit sales, it slowed from the 56% year-over-year increase in the fourth quarter, NPD Group unit DisplaySearch said this week.

Overall, TV unit sales were almost flat, down from a 5% increase in the fourth quarter.

“The ratio of LCDs to total TV sales in North America and Western Europe are getting so high that their growth rates are going to slow down,” said Paul Gagnon, director of North America television research for DisplaySearch. He added that the slowdown in the U.S. economy had the biggest effect on sales of TVs 40 inches or larger.

Still, TV makers are sinking money into manufacturing plants to feed the growing demand in developing regions like Latin America and Eastern Europe, where cathode-ray tube TVs are being ditched for LCDs.

Last week, LG Electronics CEO Kwon Young-Soo said at an analysts meeting that the world’s third-largest TV maker behind leader Samsung and Sony will invest 1 trillion won ($960 million) in a new LCD production line, according to the Wall Street Journal.

In April, Sony said it would double production of its Bravia LCD sets this year at its Slovakia plant, which serves Europe, to 4 million annual units, and double the production of its latest-generation LCD panel production line, which it owns with Samsung, to 60,000 sheets a month by next year.

That may lead to a glut of LCDs by next year and ultimately a continued drop in prices, said Mr. Gagnon.

“The market nearly always consumes every panel,” said Mr. Gagnon. “It’s just a matter of price.”

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