On April 16, 2008, Samsung clarified that it will continue supplying LCD TV modules to Sony. There were speculation that Sony had officially requested Samsung to supply LCD cells instead of modules. The modularization process is very labor intensive and many of the largest LCD manufacturers have set up module plants in China. The very first plants experienced extremely low yields as much debris entered into the plants. Anecdotal studies suggest the main cause of debris was due to dirty laborers. This situation has been corrected by building shower systems and establishing rules requiring a shower prior to entering the main facilities. Not only is the module process very labor intensive, it is very profitable. A LCD cell can be sold at only 40%-50% of the price of a module.
Samsung did confirm that Sony recently verbally requested LCD cells for testing. Why would Sony do this? Because of two things. One, Sony believes they can modularize the LCD cells just as well as Samsung. Sony will also be differentiating its high-end LCD TVs by applying different technologies such as backlights, x.v. Color, etc. Second, Sony does not want to pay Samsung for module prices if it does not want to.
Recently, Sony has slashed prices on its LCD TVs in the US and China. I believe these price were very well timed as demand for LCD TVs will start to slow due to recessionary pressures in the US and other regions make it difficult for consumers to purchase high-priced items such as LCD TVs. Unfortunately, LG Display’s Kwon Young-soo was not too pleased with Sony’s actions as that would impact the profitability of LG Display and other LCD manufacturers, who have been struggling to keep their cost of manufacturing below price declines. Recently LG Display and other LCD manufacturers have reported a very good Q1’08. This is not good news for those looking at the entire LCD supply chain. As retailers struggle to move high-priced LCD TVs, LCD panel manufacturers are pumping even more into the supply chain. At some point in 2008, there will need to be a correction and it will not be pretty.
Source: The Korea Times
[tags]Display Manufacturer, LCD Cell, LCD Module, LG Display, Samsung, Sony[/tags]