LG.Philips: LCD prices will level out

Flat-screen maker LG.Philips LCD expects prices of its television panels to fall at a much slower pace this year on stronger demand and limited output growth, a company executive said on Thursday.

After makers raced to ramp up production, the liquid crystal display industry has suffered tumbling prices and oversupply since last year, but expects a cyclical upturn in the second half as low price tags encourage consumers to buy large, sleek TVs.

"TV panel prices in March-April were likely the lowest throughout the year," Champ Shin, vice president in charge of TV panel sales, said at the Reuters Global Technology, Media and Telecoms Summit.

He expected the price decline for all of 2007 to be about 15 per cent at the most, a sharply slower pace than the one that led to a 30 per cent decline last year. A reduction in inventory since late last year and an expected seasonal increase in demand in the second half, combined with a limited growth in fresh supply, will help, he said.

"The prices will likely be stable for the time being. In the strong season, there's even some chance for a [price] rise," said Shin, who added August to October typically marks a peak in the business.

LG.Philips, the world's No 2 maker of large LCD panels, competing with bigger home rival Samsung and Taiwan's AU Optronics, reported its fourth consecutive quarterly loss in the January-March quarter but expects to return to profitability during the current quarter.

"We are confident of a monthly break-even in the second quarter," Shin said, declining to elaborate on the timing. He expected the company to see gradual profit growth from then on.

Analysts polled by Reuters Estimates expect LG.Philips to earn $321.6m in net profit this year, swinging from a 769.3bn won loss in 2006. Lifted by a hope for earnings recovery, the company's shares have risen 38 per cent so far this year, outperforming the wider market's 12.6 per cent gain.

Winning market from plasma
Helped by falling prices, LCD TVs are increasing their share in the popular 40-inch-and-larger TV market, winning a cutthroat price war against the competing plasma display technology.

But plasma makers still have an advantage in the 50-inch-and-bigger category, where few LCD makers compete.

"40- and 42-inch TVs are becoming mainstream," Shin said. "In the below-50-inch TV market, the [LCD's winning] trend will go further and the advantage gap will become deeper."

Sharp and Samsung, partners with Sony, have built a larger 'eighth-generation' LCD line, seeking an early entry into the 50-inch-plus panel market.

LG.Philips LCD has yet to make a final decision on whether it would go ahead to build a proposed '5.5th-generation' production line, designed for both TV and monitor/laptop panels. Shin said the decision was expected soon, but did not elaborate.

Shin added LG.Philips will maintain its product mix between TV and other panels at around half and half.

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