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iSuppli warns LCD-TV manufacturers of commoditisation

Posted: 14 Nov 2006     Print Version  Bookmark and Share

Keywords:iSuppli  LCD  LCD-TV  Dylan McGrath 

Despite projections of continued robust growth, LCD-TV manufacturers face a growing threat in creeping commoditisation that is making consumers think of TVs as interchangeable and offering no differentiating value, according to market research analyst iSuppli Corp.

The firm forecasts the worldwide LCD-TV market will grow to at a compound annual growth rate of 27.5 per cent from 2005 to 2010, reaching Rs.3,89,550.30 crore ($84.3 billion). LCD TVs are expected to surpass CRT TVs in revenue by the end of 2006, and by the end of 2009, LCD TV units shipped will exceed those of CRTs on a worldwide basis.

"The declining prices and increases in the size of LCD TVs is the best possible scenario for consumers," said Riddhi Patel, principal analyst for television systems at iSuppli, in a statement. "Rapid growth in LCD TVs is hurting the other flat panel-television technologies—even at the large-format level (40-inch and above) and by 2007 iSuppli predicts LCD TVs will take the lead in large screen units shipped."

iSuppli believes that 32-inch and smaller LCD TVs already have become commoditized and predicts 40- and 42-inch sets will join them within the next year. As TVs become commodities, profitability is diminished because consumers won't pay a premium for a commodity product, the firm added.

With new billion-dollar 7th- and 8th-generation LCD fabs coming online and their possible return on investment in jeopardy, manufacturers are trying their best to avoid a quick move to commoditisation, Patel said. The commoditisation scenario might be avoided if the supply chain comes together and collaborates to differentiate its products, she said, though that would come at a price of its own.

"On one hand, you want to remain price competitive with the product next to your own on the retail floor, but on the other hand, the cost of manufacturing the product—because you have added a semiconductor or some type of colour improvement to differentiate it—is not allowing you to do so," Patel said. Because of this, LCD-TV manufacturers are having a difficult time navigating this situation, she added.

- Dylan McGrath
EE Times

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