LCD HDTV Surplus through 2008

At the DisplayBank FPD Materials Conference last week in New York City, DisplayBank’s Kenny Kim gave a presentation on the supply and demand for LCD panels over the coming years. He forecasts a sizeable surplus manufacturing capacity to continue until early 2009. This is in spite of many companies announcing plans to slow down or cancel new plant construction and expansion of existing plants. The fact is that the capital investment in manufacturing facilities has dropped dramatically for last year and this year, which means that there may be a shortage in capacity — which leads to short supplies of panels — starting in 2009.

It costs $3 billion or more to build a plant for large LCDs, and DisplayBank predicts that it will take roughly $60 billion in new investments over the next four years if manufacturing capacity is to keep up with demand. The big question is where will the LCD manufacturers find that money?

This is good news for consumers, at least in the short run. Many industry analysts now expect LCD HDTV prices to decline another 25% over the course of this year, and depending on circumstances, they could fall more than that. And we can expect them to continue to fall in 2008 as well. The crystal ball for 2009 gets murkier, however, and whether the market will be in surplus or shortage will depend on pricing, demand, and how many new factories the manufacturers (and their creditors) decide to build.