LCD Price Hike Expected

Demand likely to surpass supply for more than a year, vendors say.

BOSTON--A shortage of LCDs will keep prices for desktop and notebook displays at their current levels, or even raise them a bit, until new factories come online in 2003 and increase supply, according to a pair of LCD makers at the Society for Information Display conference here this week.

Global demand for LCDs outstrips the current supply by about 4 million units, said a Samsung Electronics spokesperson at the show, who asked that his name not be used. That shortage will increase the prices of all LCDs--including the ones used in TVs and handhelds. The Samsung spokesperson expects the price hike to occur through the second or third quarter of 2003. Samsung anticipates that prices of all LCDs will rise by between $10 and $20 per quarter, he added.

LG.Philips, a joint venture between LG Electronics and Koninklijke Philips Electronics, also expects shortages to persist until the middle of 2003, according to a company spokesperson who also declined to let his name be used. LCD prices have mostly stabilized for LG.Philips, largely due to traditionally weak second quarter demand, he said, but hat could change in the third and fourth quarters of 2002, since those quarters are usually much stronger. Consequently, he said, the end of the year could see further shortages.

Relief in Late 2003

Both companies expect the shortages to ease--and prices to creep lower--as new manufacturing facilities go online in late 2002 and mid-2003. Samsung will open a so-called fifth-generation plant in September or October of this year, with LG.Philips following in mid-2003, the spokespeople said.

DisplaySearch, a research and analysis firm that specializes in the display market, expects prices to rise this quarter, too, but that rise should be the last one for a while, according to Barry Young, vice president and chief financial officer of DisplaySearch.

In response, DisplaySearch is raising its forecast for LCD production, and expects prices to come down, though the company isn't sure when that will happen, Young said.

The increase in LCD prices has already hit some PC makers, which are passing those costs on to users. In March, Apple Computer said that it would raise the price of its latest iMac by $100 due to the rising cost of LCDs.

The Society for Information Display show runs through Friday in Boston.