LCD TV Panel Prices Fall. Again.

LCD TV panel prices fell again in mid-July and this has been a trend for a while. 32″ LCD TV panels with a pixel format of 1366 x 768 fell $13 to $285 in mid-July, according to DisplaySearch. This is great news for consumers ready to jump on a 32″ LCD TV and not-so-good news for LCD TV panel manufacturers. Why are prices falling? There are many reasons but it boils down to supply and demand. Supply and demand analysis after the jump.

Supply of 32″ LCD TV panels are plentiful because a tremendous amount of them are being manufactured by the largest and most advanced LCD fabrication plants from the likes of Sharp, LG Display, Samsung, AU Optronics (AUO), Chi Mei Optoelectronics (CMO) and others. Sharp is using its latest and greatest G8 TFT LCD fab to manufacture 32″ LCD TV panels. The original plan was to use G8 to produce 42″ and larger panels. Many others are loading 32″ LCD TVs too. And there’s a reason for that.

The demand for LCD TVs are about the same but the size mix is very different this year. US consumers are having a difficult time as disposable income decreases, access to credit becomes more difficult and the cost of living increases, especially due to higher gas and food prices. So, where does that leave consumers who want and need to get LCD TVs? With next February (analog cut off) not too far away, consumers are purchasing LCD TVs but smaller and more affordable units. The sweet spot seems to be 32″ LCD TVs that is roughly about 30% of the market. But the overall LCD TV demand isn’t growing as expected.

With more demand for smaller and cheaper LCD TVs, production will focus on those sizes, and in this case 32″. LCD production capacity was built based on a more aggressive growth scenario for LCD TVs, but that’s not happening. So large LCD TV fabs are producing smaller LCD TV panels. The not-so-great demand for LCD TVs coupled with a tremendous surge in LCD TV production is leading to a situation where inventory is growing and prices are dropping.

What to do? There are two things to do: lower prices even more to stimulate demand to clear out inventory. Throttle down production of LCD TV panels and LCD TV sets to better match what is happening in the retail markets.

[tags]LCD TV, 32″ LCD TV, 32″ LCD TV Pricing, 1366 x 768, Samsung, Sharp, LG Display, LPL, CMO, AUO, AU Optronics, Chi Mei Optoelectronics[/tags]

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