Friday, October 31, 2008

HDTV Prices As Low As They Can Go?

According to a display industry report from DisplaySearch TV OEMs are paying just about the cheapest possible price for their LCD panels, which in turn make up about 70 percent of the cost of a typical LCD TV. This means there is almost no wiggle room to lower costs, an indication that LCD TVs will be discounted as much as they possibly can this holiday season.

The report from DisplaySearch says that the price being paid for a 32-inch panel used inside an HDTV is just $223. However, the estimated cost to manufacture it is either $256 or $248, depending on whether the glass is being manufactured in an older "Gen 6" fab or a newer "Gen 8" facility.

Factor in the cost of depreciation and remove an accounting provision, the actual cash cost to manufacture that same 32-inch panel is either $221 or $218, just a few dollars lower than the sale price. A 42-inch full HD panel is just slightly better: a $425 sales price undercuts the $435 cost, including depreciation, and is above the $390 cash cost. This means that display manufactures are offering displays at or near cost. Great news for consumers, not so good news for manufacturers.

"TFT LCD panel makers face negative operating profits when panel prices are lower than the total cost," said Yoshio Tamura, senior vice president of DisplaySearch in a statement. "When the price approaches the cash cost, panel makers will suffer from cash out difficulties and take necessary steps to cut production and reduce capacity utilization. Despite this, our research shows that as long as panel prices approach the cash cost, we believe further panel price erosion will be limited."

To help panel makers recoup some profits, DispaySearch said that panel makers are expected to aggressively push their own suppliers to reduce costs, effectively cutting costs to move more merchandise.

Paul Gagnon, DisplaySearch’s director of North American TV market research, predicts the following prices in the coming weeks:

  • 19-inch high-definition LCD: $199
  • 32-inch HD LCD: $399-$499
  • 40-inch 1080p LCD: $799-$999
  • 42-inch HD plasma: $599-$699
  • 50-inch HD plasma: $899-$999

If the pricing is accurate we'll see a significant savings over today's current pricing. Currently the least-expensive 32-inch LCD's hover around $499 with most prices over $599, if the predicted pricing is correct we could see those displays priced anywhere from $100-200 cheaper. DisplaySearch predicts even greater savings for larger screens, with nearly $200-300 in savings for screens 42" and above.

Source: PC Mag - NY Times Bits Blog

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