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One More Nail in Plasma Coffin

September 19, 2008 | Author: Ibex Marketing

Hitachi has announced that it will cease production of plasma panels, and instead buy them from Panasonic (Matsushita). This mirrors a similar decision made earlier this year by Pioneer. This is good news for Panasonic — at least in the short term — as it ensures an increased market for the output from the company’s expanding plasma production facilities. On the other hand, it increases the risk for the future of plasma flat panel products, as it leaves Hitachi with less investment in the technology which would make it easier to withdraw from that segment of the TV business. Hitachi already has a deal with Panasonic to supply LCD panels for TVs.

Overall, I expect that this is bad news for plasma, as Hitachi has been one of the steady supporters of the technology. And this is not an industry that needs more bad news. DisplayBank is reporting today that LCD TV panel shipments worldwide declined 2.8% in June and another 4.2% in July, but the declines for plasma panels for those two months were down 10.2% and 10.8%, nearly triple LCD’s losses. Add to this the fact that the overall volume of plasma panels is about 0ne-eighth that of LCD panels, and it looks like an industry in decline.

On a more positive note, this probably also signals continued consolidation in the flat panel TV market. Hitachi has been one of those name brands in the middle; not high enough to be considered a top tier, and not competitive with the lower, aggressive brands like Vizio. These brands are getting squeezed from above and below, as lower prices reduce the difference between top and bottom brands. Philips has already surrendered the North American market, licensing its brand to Funai. Now that Hitachi’s heart is no longer in flat panel production, it may be setting up to leave the market entirely.