A year ago, the president of Sony’s U.S. electronics unit complained that there had been too much price erosion for LCD televisions in 2006, and he expressed hope that the price declines would be smaller in 2007. He said that some competitors priced their products so low that it “borders on being irresponsible“.
This adds a little irony to the statements this week by the CEO of LG Display (formerly LG.Philips LCD), the number 2 LCD panel manufacturer. Kwon Young-soo blasted Sony for price cuts that were “excessive”. Sony put out a number of models with lower prices in the fourth quarter of last year, which helped boost its market share.
One factor in LG Display’s reaction to Sony’s pricing strategies is that LG Display has just lost some significant volume now that Philips has announced its exit from the US and Canada LCD TV market.
There’s no doubt that LCD panel prices cannot continue to decline indefinitely, especially in the face of rising costs for food and energy, as well as the tighter credit markets for both companies and consumers. Still, the weakening demand for HDTVs and rapidly increasing production capacity are likely to result in significant oversupply and downward pressure on prices for the near future.