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Why Are Plasma Sales Booming At The Expense Of LCD?

Why Are Plasma Sales Booming At The Expense Of LCD?


Plasma sales are booming while LCD TV sales are being to slow according to  David Hsieh, Vice President, of DisplaySearch in China. In a report issed late yesterday he said that plasma sales were hitting historical highs.
 “There has been a great deal of news recently about the weak demand for LCD TV panels, causing panel prices to fall. Panel makers report that they do not see strong demand for the next few months. Although monthly shipments of LCD TV panels are expected to show growth in September and October, indications are that shipments will decline from November when the holiday season fulfillment is over. All LCD TV panel makers are depending on panel prices not falling below cost through Q1’09”.

He claimed that in contrast, plasma panel makers continue to enjoy strong shipment results and healthy demand. Why is this? There are several points to consider:

Two Korean plasma panel makers jointly shipped over 1 million units in September, a historical high. Samsung SDI shipped almost 600K units, compared to 400K in August. LGE shipped 450K units, compared to just over 350K in August.
Plasma TV panel prices are dropping continuously. 42″ HD and 50″ HD prices both dropped 4% M/M in September and are expected to drop by another 3%~5% in October.
Plasma panels continue to maintain a price gap with equivalent LCD TV panels. For example, 42″ HD plasma panels (including power supply and optical filter) are now 25% less than 42″ 720p LCD panel prices and 31% less than 1080p (including power supply). A similar comparison shows that 50″ HD plasma panels are 45% less than 52″ 1080p LCD panels (and 29% less than 50″ 1080p plasma panels). Of course, the gap is expected to shrink as 1080p LCD TV panels are now falling rapidly.
Low price points for the coming holiday season are increasingly likely, such as $699-799 for 42″ HD PDP TV, $999 for 50″ HD PDP TV, and $1,499-1,599 for 50″ 1080p PDP TV. Strong plasma panel shipments could be an indication that the brands are preparing the pipeline.
Some TV brands feel that as long as the economic situation is unclear, it is possible that consumer electronics consumption will be weak. In such an environment, consumers will tend to choose cheaper models when they purchase a TV. Currently, plasma TVs with comparable size and resolution are less expensive in many cases. Panasonic’s TH50PX80U (50″ HD PDP TV) is tagged at $1,200 at Circuit City, which is the same price as Sharp’s LC42D64U (42″ 1080p LCD TV). Panasonic’s TH42PX80U (42″ HD PDP) is tagged at $800 in Circuit City, the same as LG’s 37LG30 (37″ HD LCD TV).

These attractive price points seem to explain why plasma panel demand is strong right now, even as the forecast for larger size LCD TV remains cloudy.