2006: Year of the LCD TV?

Samsung Electronics sees strong demand for LCD televisions this year as prices continue to fall, an executive said last week at the International Consumer Electronics Show in Las Vegas. (See PC World's newest reviews of 32-inch LCD TVs.)

"It's going to be a very strong year," said David Steel, vice president of marketing for Samsung's digital media business, in an interview. "The feedback that we've got during the show from the retailers, especially in the U.S., is that 2006 will be a really spectacular year."

Steel estimated the global market for LCD televisions will be worth between 25 million and 30 million units in 2006, up from about 19 million in 2005, and said demand for sets with large screens is increasing fast.

"What we are seeing is the strength of the demand in 40-inch is moving quicker than anticipated," he said. "In the European market, which is 41 percent of the global LCD market, the sweet spot for tube TVs has been 27 inches to 29 inches so you might assume the sweet spot [for LCD TVs] might be 32 inches but actually its moving quite rapidly to 40-inch."

As a result, Steel expects this will increase competition between LCD and PDP (plasma display panel) TV set makers because both sets compete in the market around 40-inch screen size.

Increasing Production

Samsung is quickly increasing its own production of 40-inch and 46-inch LCD panels. It opened a joint-venture production line with Sony in South Korea last year focused on such screen sizes and that's brought big cost reductions. The line, called 7-1, processes glass sheets on which eight 40-inch panels or six 46-inch panels can be made with little waste.

On January 1, Samsung opened a second production line, called 7-2, on the same site in Tangjung and began on Tuesday shipping the first panels off the line. The panels are sent to Samsung factories where they are combined with other electronics to make a television.

"If you go back two years the price of a 40-inch LCD TV was probably around $7000. That's because 2 years ago 40-inch panels were being made on 5th generation or 6th generation which are not optimized for 40-inch," said Steel.

The start of production on 7th generation lines, like S-LCD's 7-1 line and Samsung's 7-2 line, mean manufacturing cost savings and so cheaper televisions.

"That's what gave the really big cost advantages so we went from $7000 two years ago to about $3000 now for a 40-inch LCD TV," he said.

Last week, iSuppli revised its estimates for LCD TV shipments based on strong consumer demand. It said it expects the market to grow at a compound annual growth rate (CAGR) of 54 percent between 2004 and 2009 to hit 76.7 million unit shipments in 2009. The company had previously anticipated CAGR of 47 percent and 61.2 million units in 2009.

In 2005, there were 19.6 million LCD TVs shipped, which is more than double the total for 2004, according to the company. It expects 2006 shipments will hit 31.4 million units.

The market research company estimated Samsung had a 10 percent share of the LCD TV market in the third quarter of 2005, up from 9 percent in the second quarter. That put Samsung in global fourth position, down one place on the previous quarter as a result of a strong showing by Sony.

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