Time to put off buying LCD TVs, displays

The LCD panel industry is suffering from over supply and falling demand, and in this case, what's bad for Wall Street and stock prices is good for consumers.

Nobody likes to buy an expensive new LCD TV or LCD computer display and then watch as prices tumble within weeks or months of the purchase. So buyers beware, that's exactly what could happen if the LCD industry situation continues to unfold as some analysts predict.

One of the year's hottest seasons for buying new LCD TVs and desktop monitors is around the corner, mid-August through September, and analysts are nervous that people may not buy as many units as expected, which will send prices lower.

"Our recent channel checks show that the industry pendulum has swung into a 'buyer’s market' where customers are holding back orders," said Jeffrey Su, an analyst at investment banking firm Merrill Lynch, in a recent report.

One problem facing the industry is a supply gut.

"Over-shipment of large-area LCD panels in (the second quarter) due to an overly optimistic outlook for 2008 was the main factor contributing to the rapid and significant panel price reductions seen in the panel supply chain beginning in June," said DisplaySearch, in a report issued Monday.

Companies shipped 117.9 million large-sized LCD panels during the second quarter, the largest number ever shipped in a quarter, the market researcher said.

Problems with consumer demand have already cropped up in two of the world's biggest markets for LCD TVs and displays, the U.S. and China. Americans are combatting a falling housing market, rising unemployment and high gas prices, hurting demand for a number of products.

The TV market overall in China has weakened over the past few months, executives at Taiwan's two largest LCD makers said at their second quarter investors' conferences. Prices have been hurting since May, according to a JPMorgan report issued last week, and "further price cuts are needed."

That's great news for people looking for new LCD TVs and displays, though it could take a month or so for component price declines to filter through to retail store price tags.

To combat falling prices, LCD makers such as South Korea's LG Display and Taiwan's AU Optronics have said they plan to cut back production.

The trouble is, production cutbacks in industries with multiple competitors often fail, and there's reason to believe the ploy will fail again this time: two of the biggest LCD screen makers, Samsung Electronics and Sharp, are increasing production.

During its second quarter investors' conference, Samsung, the world's largest maker of LCD panels, said it will increase its planned spending on new LCD production lines to 4.5 trillion Korean won (US$4.44 billion) this year from an earlier forecast of 3.7 trillion won.

Sharp continues to ramp up production at facilities in Mexico and Poland, it said in a statement last week.

That means prices for LCD panels will likely continue to decline in coming months, leading to more consumer bargains later this year.

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