While the November and December retail wars were raging, the LCD manufacturers of the world saw orders decline. This is a normal seasonal fluctuation, as retailers scale back from the feeding frenzy of the holidays. But while orders are down, many manufacturers are looking to expand their production capacity even further for the coming years.
For example, CMO is one of the major Taiwanese LCD producers. Their new Gen 7.5 plant is set to start volume production soon; this size is well suited to make the 42″ models that are taking over from plasma at in that size segment. CMO also has a Gen 6 plant scheduled to come online at the end of this year, and is increasing production at its Gen 5 and Gen 5.5 plants. Meanwhile, Sharp has doubled the output of its Gen 8 plant to 30,000 substrates per month. The Taiwan company AUO has a new Gen 7.5 plant that is just starting volume production with a 10,000 substrate monthly capacity, which could eventually be expanded to 60,000 substrates per month.
All this production capacity costs tens of billions of dollars to create, so clearly these companies are betting that they will find buyers for their output. The big gamble is whether or not there will be enough buyers to maintain a profitable price point. If the manufacturers produce a surplus of panels, prices will have to fall further in order to attract more buyers.
We could well be entering another period of over-supply in the LCD industry, which is good news for consumers. The competition is not easing up, and we are certain to see new lows for LCD HDTV prices this year.