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LCD TVs squash display rivals in China

Posted: 04 May 2007 ?? ?Print Version ?Bookmark and Share

Keywords:China LCD TVs? LCD TV market? China plasma TV?

Like the rest of the world, China is experiencing extreme price drops for LCD TVs, spurring a shipment increase of 32 percent to 3.9 million units in the fourth quarter of 2006, according to iSuppli Corp.

Aggressive pricing, increased consumer interest and commitments from LCD panel makers have prompted television OEMs in China to push the technology, despite declining profit margins. With the strong growth in the global demand for LCD TVs, China's exports of such television are on the rise. However, Chinese manufacturers face challenges in their export activities, including anti-dumping charges, royalty payments and tariffs in certain regions of the world.

The good news is that these are the exact same problems China's domestic companies have dealt with for years with CRTs, and because of this they are not repeating some of the same mistakes they have made in the past and are seeking to avoid making these missteps again.

China's LCD TV market revenue is forecast to grow to $22.6 billion by 2011, expanding at a CAGR of 24.6 percent from $7.5 billion in 2006, according to iSuppli. Total Chinese LCD TV unit shipmentsincluding both domestic and export shipmentswill reach 55.4 million units by 2011, achieving a CAGR of 39.8 percent, up from 10.4 million units shipped in 2006.

ASPs falling fast
In 2006, average selling prices (ASPs) for 30inch and larger LCD TVs in China declined by more than 30 percent. This is primarily due to a price war being fueled by competitors trying to take advantage of rising customer awareness and improved manufacturing capabilities for LCD TVs.

However, in the long run, steep ASP declines hurt the entire industry, and in order to mitigate this erosion, domestic and foreign companies are beginning to focus on quality issues as well as technological innovation to help preserve brand identity.

With customer preferences for larger-sized sets for their primary televisions and a number of sixth- and seventh-generation LCD fabs reaching full production, prices should continue to decline over the long term, despite what OEMs do to slow the process. iSuppli believes that in 2007, the 40inch size will be the sweet spot in the market and garner the most support from advanced LCD fabs and in terms of OEM manufacturing commitments in China.

Plasma TVs face stiff competition
As LCD TVs advance in China, plasma TVs are feeling the pressure from a lack of interest on the part of local OEMscombined with the fact that the product in general is experiencing a slowdown in demand. In the fourth quarter of 2006, domestic plasma TV sales in China were only 172,000 unitsa mere blip compared to the overall market, considering LCD TV sales amounted to 1.7 million units domestically in the same period.

Despite a slowing of the market for plasma TVs and a boom in LCD TVs, iSuppli forecasts that China's plasma TV domestic shipments will reach 1.9 million units by 2011, growing at a CAGR of 22.1 percent, up from 683,000 units in 2006. However, plasma revenues domestically will only grow moderately, reaching $1.7 billion by 2011, with a CAGR of 2.8 percent, up from $1.1 billion in 2006.

- Kathleen Zhang
China industry analyst, iSuppli Television Service

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