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Large Screen TV Market Adapting to Demand

Despite soaring sales of larger-screen TV sets, rapid price declines will cause the Liquid Crystal Display Television (LCD-TV) market to undergo a deceleration in 2007 compared to the red-hot year in 2006, although growth will continue at a healthy rate, iSuppli predicts.

Global LCD-TV shipments will rise to 62.5 million units in 2007, up 57 percent from 39.7 million in 2006. This is down from 95 percent growth in 2006. This slowdown reflects the large volume of LCD-TV shipments, which makes it difficult to maintain such dramatic growth on an annual basis.

The slowdown in 2007 will be more pronounced in terms of revenue. Worldwide LCD-TV factory revenue will rise by 20 percent in 2007, expanding to $53.5 billion, up from $44.7 billion in 2006. This represents a 56 percentage point decrease in growth compared to 2006, when LCD-TV revenue increased by a whopping 76 percent.

"Regardless of the slowdown, the LCD-TV market remains in a phase of explosive growth, mainly due to booming sales of large-sized sets," said Riddhi Patel, principal analyst for televisions systems at iSuppli. "Because consumer interest has accelerated and with commitments from panel makers and OEMs, LCD panel makers are increasing their support for the large-screen television market by upping their capacity at seventh-generation and more advanced fabs."

Because of this, Patel said, a 2007 key focus for LCD-TV retailers and manufacturers will be the proliferation of 40-inch and larger sizes, as the cost of these televisions declines and their availability increases.

The number of LCD-TV units shipped in 2007 will increase dramatically for sets that are 40-inches and larger, iSuppli predicts. For LCD-TVs in the 40-inch to 41-inch range, iSuppli forecasts manufacturers will ship 2.3 million units by the fourth quarter of 2007, up 60.3 percent from 1.4 million in the fourth quarter of 2006.

Similarly for LCD-TVs in the 42-inch to 44-inch range, iSuppli forecasts shipments of 1.1 million units by the fourth quarter of 2007, up 87.7 percent from 594,000 in the fourth quarter of 2006.

With more larger-size LCD-TVs being shipped, revenues for manufacturers will continue to grow -- despite declining Average Selling Prices (ASPs), which have been falling quite rapidly over the past few quarters of 2006 and will persist through 2007.

iSuppli predicts the overall LCD-TV ASP will decline at a CAGR of 12.8 percent from 2006 to 2010, with the most evident decreases in the 35-inch and larger market. However, overall LCD-TV revenue will rise at a CAGR of 17.2 percent during the same period.

Looking at pricing for specific sets, iSuppli predicts the ASP for the 40- to 41-inch LCD TVs will decline to $1,184 by the fourth quarter of 2007, down 30.8 percent from $1,711 in the fourth quarter of 2006. For 42- to 44-inch models, the price will fall to $1,283 by the fourth quarter of 2007, down 37 percent from $2,036 in the fourth quarter of 2006.

"Premium LCD-TV brands will benefit from sales increases due to these rapidly plunging prices," Patel said. "But value brands also stand to gain significantly."

Though Sharp Corp. continues to lead the LCD-TV market worldwide, it has lost its dominance to Philips and Samsung in the North American market and now is ranked third in that market. OEMs like Philips, Samsung and Sony are aggressive in reacting to the market needs and changes as well as maintaining aggressive pricing when compared to Sharp.

Value brands will continue to make their presence known, already accounting for more than 20 percent of overall LCD-TV shipments in the third quarter of 2006. Declining prices will not cause these value brands to disappear and may promote their further encroachment into the market due to their low-cost orientation.

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