Ultra-HD TVs must realize market outside China, and fast!

There is an abundance of optimism when it comes to prospects for enhanced HDTV production. However, this positive outlook amid the declining PC screen market must cross the boundary to reality. Otherwise, the impact is surely to be felt in terms of pricing, one way or the other.

The sudden focus on TVs hasn't come out of nowhere. Sales have been rising steadily for the past several years. But the shift toward massive, high-resolution screens has become so pronounced that it now seems to defy common sense. That makes it very difficult to predict glass supply.

As the recent Consumer Electronics Show (CES) in Las Vegas showed, screen sizes for the so-called 4K or ultra-HD TVs have now reached 110in. Resolutions are so fine that the human eye can't really detect the improvement in many cases. Nevertheless, an NPD DisplaySearch report said sales of the high-end sets are likely to increase from fewer than two million in 2013 to more than 12 million in 2014. That's a massive increase in demand for high-end glass, particularly with the units unveiled at the CES coming in 20-30 percent larger than their predecessors.

The TV arms race has implications for the entire electronic supply chain as screens consolidate their position as the focus of device design across the industry. As recently as five years ago, predicting glass supply for the TV business didn't necessarily have implications for the telephone or PC business, or even for medical devices. Now it does.

The size of the new TV screens is also an issue. A 100-plus-inch TV is a resource-intensive device with a high unit cost. To complicate matters, sales of the new sets are not nearly as predictable as phone or even tablet sales. NPD DisplaySearch's rosy predictions aside, it's unclear how large a market there is for $4,000-$20,000 TVs. Most of the current sales are in just one market, though a large one: China.

Writing from the CES, Techlicious reported that screen resolution has gotten so fine, consumers can't tell the difference between the new 4K screens and older HDTV flat screens on sets smaller than 70in. High-end designs on display at the CES from Samsung and LG curve slightly outward, like macaroni. Techlicious said this is in part to signal to consumers that this is new technology, not the usual flat screen your TV has used since the mid-1990s, in case you can't tell that by just looking at the image.

That might seem like a hiccup between screen technology advances and consumer needs, but the difficult sales proposition for the new TVs has implications for the broader glass supply chain. With PC sales continuing to slide, demand for HD TV has been picking up slack from the shrinking sales of desktop monitors and even larger laptops. One key difference: Tablets and phones are still emerging technology, but HDTVs seem to have topped out their potential. This makes it much harder to convince someone to replace last year's TV than to replace last year's iPad.

That would seem to suggest that glass supply orders based on demand for ultra-HD TVs aren't really bets on the new resolutions and vast screens impressing consumers. It's effectively a bet on the market for the ultra-HD glass taking root outside its main market in China, particularly in the US and Europe. With both places still recovering from steep financial crises, that's a huge bet on a huge glass order for electronics that's far from crystal clear. It's just January.