Is the world going flat?

11 Apr 2006

As TV enthusiasts weigh up the merits of LCD and plasma displays or mull their options for upgrading to HD TV, it emerged earlier this week that Samsung of South Korea has agreed to a US$2bn expansion of an LCD plant it shares with Sony.

To put this into perspective, the new line is due to have a production capacity of 50,000 units per month when mass production begins in autumn of next year. The companies already run a US$2bn joint venture called S-LCD, in South Korea to produce the panels.

According to reports, the latest agreement will allow Samsung, the world’s second-biggest maker of large-sized LCDs last year, to use Sony’s brand power to expand the market for larger television panels. For Sony’s part, it is believed that the increased production capacity will help it to gain new panels to use in its Bravia line of TVs, which has helped the company increase its share of the LCD market.

LCD displays are a massive money maker for TV manufacturers: the research company DisplaySearch, which tracks this market, found that LCD revenues in Q4 2005 rose to US$10.1bn. By contrast, the humble cathode ray tube (CRT), which is the traditional technology used for TVs, earned US$7.5bn.

The revenue figures don’t tell the whole story, however. In unit terms the good old CRT outsells its newer, flatter cousin by a massive margin, according to DisplaySearch. The figures also show that CRTs had 78.9pc of the market during the final three months of last year — no small feat given that this includes the spending-fuelled Christmas season.

Despite impressive year-on-year growth figures of 137pc, in real terms LCD accounted for just 14.7pc of TV shipments worldwide and plasma screens just 3.9pc. Higher prices for TVs with newer technology explain much of this picture: at Power City for example, it’s possible to buy a large-screen 32-inch CRT TV for under €500, whereas the cheapest LCD equivalent would be close to double that figure, at €900 or more.

Punters can expect to pay still more if the set is HD-ready: that is, it can take a signal for high-definition TV, which is a new digital standard that offers greatly improved picture and audio quality.

There is as yet little content available in this format, although developments are due later this year as Sky is planning to launch a HD service to subscribers this summer. Interestingly, Samsung is reportedly preparing to offer a CRT TV that can take a HD TV feed — which would suggest that there’s life in the old set yet.

By Gordon Smith