LCD TV Price Declines May Not Last

Users looking for a new LCD TV might want to consider a purchase over the next few months because rapid price declines could be over.

The price of large-sized LCD panels used in LCD TVs fell by over a fourth in the second quarter, compared to the first, according to market researcher WitsView Technology.

The mark-downs create potential bargains for users over the next few months because the LCD panel is by far the most expensive part of the TV.

Trouble in the industry started with the World Cup soccer tournament, according to WitsView. LCD panel makers hiked production in anticipation of strong demand for LCD TVs ahead of the popular tournament, but it appears users simply didn't do as much shopping as anticipated.

3M, of St. Paul, Minnesota, blamed LCD price declines for part of its earnings shortfall in the second quarter. The company supplies LCD makers with optical film.

Supply and Demand

Instead of strong demand, LCD TV sales sputtered during the tournament, flooding the market with excess products and driving down prices. Prices of LCD TVs are actually almost always falling as makers improve efficiency at factories and pass on savings to users, but rapid declines such as what the industry saw over the previous three months don't come often. The rapid decline sank panels makers' earnings, prompting some to pare production.

While slowing production lines can help avoid a serious glut, it didn't stabilize prices in the second quarter. But continued vigilance among panel makers and anticipated greater demand among consumers in the third quarter are expected to firm prices and could send them slightly higher.

LG.Philips LCD, one of the world's largest LCD panel makers, said it expects to see LCD prices begin to stabilize and LCD TV sales grow throughout the second half of the year, particularly in the fourth quarter.

LCD prices fell off so sharply during the second quarter that the company posted a loss of $343 million.

One of LG.Philips' top rivals, AU Optronics even predicted a further downside to LCD panel prices in the third quarter.

The company said the price of LCD panels used in TVs would likely fall by a few percentage points during the three months ended September 31, due to high inventories in the market.

"Prices are falling faster than we can reduce costs," Hui Hsiung, an executive vice president at AU, said at a news conference, adding that a rebound wasn't likely until September.