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LCD, PDP TV ASPs drop due to oversupply

Posted: 08 Jun 2010 ?? ?Print Version ?Bookmark and Share

Keywords:LCD TV? TV ASP? flat-panel TV? PDP?

LCD TV average selling prices (ASPs) in 2009 fell twice as fast as they did in 2008, mainly due to a reduction in panel prices that resulted from massive over-supply in Q4 08 and Q1 09. This is according to the DisplaySearch's latest Quarterly TV Cost and Price Forecast Model & Report, which stated that overall blended ASP for LCD TVs fell 24 percent y-on-y and 21 percent for PDP TVs in 2009.

Unit demand for flat-panel TVs in 2009 was much better than expected at the beginning of 2009, mainly due to price erosion. During the first half of the year, it was easier for brands to cut prices, as LCD TV panel prices had plummeted during Q4 08 and Q1 09, affecting products sold in Q1 09 and Q2 09. However, the situation reversed itself in 2H.

"Because the rate of ASP decline was slower at retail during the first half of 2009 than the pace of panel price declines, manufacturers and retailers were able to boost margins from the low levels in Q4 08," noted Paul Gagnon, director of North America TV market research at DisplaySearch. "However, during the second half of the year, panel prices increased, peaking in September, and stayed fairly elevated in Q4 09 during what is normally a weak period seasonally. As a result, TV manufacturers and retailers gave back the margins gained early in the year to ensure that retail pricing didn't stagnate, or even rise, which could have been disastrous to demand."

Price erosion slows
Average prices for LCD TVs are expected to fall more slowly in 2010 as the rate of LCD panel price erosion slows sharply, especially with booming demand in China keeping the supply situation tight in the first half of the year. In addition, the increased mix of premium priced LED-backlit LCD TVs and 3D TVs will serve to help offset natural price erosion, resulting in the volume weighted blended average price falling only about 4 percent. LED-backlit LCD TVs carry premiums ranging from 30 to 50 percent, although those premiums will drop quickly as the supply chain matures and brands drive LED margins down to hasten the transition away from CCFL models. 32-inch HD LCD TVs could approach $300 on average by the 2010 holiday season, even from premium tier brands, although the margins for such a commoditized size category will be negative. Supply chain participants are actively trying to transition consumers towards more profitable size categories, especially 40-inch+.

Y-on-y change in average price for LCD, PDP TVs

Average prices of PDP TVs are forecast to fall 15 to 25 percent in 2010, also at a slower rate than PDP in 2009, but a little faster than comparable LCD TV sizes. All 50-inch and smaller PDP TVs will be below $1,000 on average by Q2 10, and even large sizes like 58-inch are now below $2,000 and seeing an increase in demand. 42-inch HD remains a volume driver for the PDP TV category, largely due to promotional prices that are nearing the $500 mark. Average prices for 42-inch HD PDP TVs are forecast to fall below $500 by the 2010 holiday season. 50-inch 1080p PDP TV has been gaining share at a healthy rate recently, as all three major producers are now fielding a wide range of 1080p models and 50-inch 1080p will be the key size for the rollout of 3D PDP TV this year.

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