Topology Research Institute Predicts Good and Bad for Taiwan LCD TV Makers

Although most people, struggling with more mundane issues as job security, falling interest rates and inflation, do not give a second thought about the most promising business amid the global financial fallout, the Taiwan-based market researcher Topology Research Institute (TRI) has a definite notion. TRI believes that the LCD TV sector has held its own ground throughout all the global economic downturns in recent memory. Such proposition makes practical sense, and would likely be true of the entire TV sector, for studies have been done to show that watching TV is the most affordable entertainment for the masses. So when winds of grim economy howl outside, global villagers often have little choice but to stay home and wait for rosier times in front of the tube. One recent infotainment episode on TV showed an Indian woman in a hovel with no valuable possessions except a TV and 50-channel cable subscription.

Falling average selling prices (ASPs) and strong demand growths among the huge emerging-economy segment, points out TRI analyst C.W. Chang, will likely see global LCD TV makers ship 25% more products in 2009, reaching 126 million sets.

50%-plus Growth in 2009

Riding on such wave of rising momentum, makers of LCD TVs in Taiwan are also expected to ship 27% more sets next year, with a few major players expected to see 50%-plus growths, including TPV Technology Ltd., Wistron Corp., and Compal Electronics Inc.

Some cutting-edge, notable features are being developed in the LCD TV sector, according to Chang, including extra-thin screens, Internet-enabled services, wireless transmission, high definition, energy-efficiency etc. In fact, the newly-launched Sony Bravia KLV-40ZX1M LCD TV has a screen that is less than 10mm, or about as thick as many ball-point pens.

Promising Potential

The TRI says that the LCD TV penetration rate in emerging markets as China, the Middle East, Latin America etc. is only about 30%, showing promising replacement-purchase potential. In 2009, LCD TV shipments to emerging markets will account for around 42% of the overall global market, making deliveries to such rising economies key drivers of growth.

The market researcher adds that 30-34 and 40-42 inch models will continue to be market mainstays in 2009, but average ASPs of LCD TVs will drop by 15% to 20% from this year, realized by steadily falling panel prices caused by overcapacity and underselling rivalry among panel suppliers.

Major international brands as Samsung, Sony, LGE etc. are expected to see 30%-plus sales growth in 2009 due to early entry into important emerging markets and increasing global shipments. The shipments from Philips, which has been gradually withdrawing from the sector, and Sharp, which has been actively setting up in-house production of thin film transistor-liquid crystal display (TFT-LCD) panels, are worthy of further observations, TRI says.

Inevitably and positively benefiting from the snowball effect, the trend is clearly towards the existing big leaguers gaining even bigger size and strength, with such growth encroaching on the survivability of second-class players.

Dipping Growth in 2009

The shipments by contract suppliers in Taiwan to second-class LCD TV brands are expected to also suffer a certain degree, with Korean brands' increasingly declining outsourcing rates to also take a toll on the volume. Taiwan suppliers are forecast to ship 25.9 million LCD TVs in 2009, compared with 20.44 million in 2008, TRi says, the year-on-year (YoY) growth rate is expected to shrink to 27% in 2009 compared with 36% in 2008.

Only three major LCD TV contract suppliers in Taiwan are expected to see clear sales gains in 2009, including Wistron (94% YoY growth forecast), TPV (64%), and Compal (58%), with the others likely to encounter a growth plateau.

Taiwan-based makers of key parts for LCD TVs also will be challenged in terms of global competitiveness. Except Mstar Semiconductor Inc. and MediaTek Inc., suppliers of LCD-TV controller ICs in Taiwan are expected to gradually withdraw from the sector due to inferior chip-integration ability, and shaken by patent-infringement lawsuits filed by big global rivals.

Aiming to be Thin

Likely the normal path of development in LCD TVs, the trend is towards building ultra-thin screens in 2009, TRI observes. Sony may be the pioneer by introducing its 9.9mm-thick LCD TV at the 2008 IFA in Berlin, Germany, setting the bar at sub-1cm-thick for the industry. Such advancement in paper-thin LCD TV technology has been realized by "Edge" technology, which illuminates LCD screens literally from the periphery with LED arrays, instead of the conventional CCFL (Cold Cathode Fluorescent Lamp) backlighting.

Besides ultra-thin screens, Sony is also going green: having demonstrated an LCD TV burning only a miserly one-third the power of a same-sized cathode-ray tube (CRT) TV. Staying in the eco-conscious fold, Sharp also plans to launch its Green LCD TVs.

Internet on TV

With the e-generation having been watching TV from desktop LCD monitors, the same ones used for PCs, for some time, foresighted LCD TV makers have been tapping the steady growth of Internet communities. Besides diversifying the applications of LCD TVs to include photo sharing, somewhat old hat on PCs, home moviemaking, and blogging, increasingly more LCD TV makers, including Panasonic, Samsung etc., have teamed up with major web service providers Google and Yahoo to promote the "Internet on TV" service, offering convenient access of stock, news, weather information, online photo album, video sharing etc., without viewers having to move from LCD TV to PC monitors. Could the day of LCD TV and PC as one be nearer than ever? The TRI suggests TV makers to stay fully focused on such trend of integration.

With Full High-Definition (Full-HD or 1080p resolution) becoming less hi-tech lingo than household reality, TRI says, makers of LCD TVs possessing 100/120Hz image-dynamism technology are expected to increasingly tap such know-how as mass-appeal sales point; while WHDI (Wireless Home Digital Interface), a new wireless high-definition video standard, is also mixing it up for players in the LCD TV sector.