Efficient manufacturing cuts LCD production cost in half

San Jose (CA) - Market research firm Displaysearch expects manufacturing costs for LCD panels to drop by 62 percent in the next four years. Count in the natural price erosion in the industry and $100 17" displays suddenly appear on the horizon.

After experiencing a rocky second half of 2004, the global LCD is again steering into a time of recovery. Unlike in the past, the new growth will be driven through cost reduction made possible due to the enormous investments panel makers made in the past years and surfacing depreciation effects. According to Displaysearch analyst Jin Kim, manufacturers are also taking advantage of higher yields in their newer fabs.

Kim expects manufacturing cost to drop by about 62 percent until 2008, which will add to the typical price erosion that advances usually in an even faster pace. He believes that consumers already have seen the effects of this trend with 15" displays hitting a $199 price point, 17" models retailing for as low as $299 and mainstream 19" displays for $399.

A combination of a currently slowed increase of panel materials production as a result of an oversupply at the end of 2004 as well as a climbing demand for certain LCD segments could bring a shortage of specific panel sizes available on the market, according to reports from various research firms. For example, Displaysearch believes that the growing demand for 17" displays will outpace supply in the short term. "If you plan to buy a 17" LCD, I would do this fairly soon," he said. A modest price increase for this segment should be expected this year. However, there is a different scenario for 19" displays: "If you can spend the extra money for a 19" model, it makes sense to wait for prices to drop," Kim said.

For the long term, the outlook for the industry is substantial growth and consumers can expect further price erosion. According to Kim, 15" panels currently are available for about $100, which could translate into $150 low-end displays in the near future. Four years down the road, 17" models could be available in this price range or even at the $100 mark. "It is too far out to give a reliable forecast. But a $100 17" display by 2008 is quite possible," Kim said.

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