LCD Price Increased for 9 Months

Required for a computer monitor, digital TV and mobile phone, LCD has been in good demand.

According to the report of the related companies, the LCD price increased to USD 2,600,000 from USD 2,020,000 (last September), continuously increased for 9 months. Currently, the demand is exceeding the supply.

One of US Display investigation institutions, ‘Display Search’ forecasted “LCD sales of this year of Samsung Electronics will amount to USD 3.6 billion. The sales of the first half of the year will be estimated at USD 1.8 billion. The annual sales of the last year totally amounted to USD 2.4 billion.

Accordingly, domestic LCD companies such as LG Phillips LCD and Samsung Electronics have extended the production facilities.

LG Phillips LCD announced on June 24, “We have operated firstly the production line of the fifth generation in May and plan to construct the fifth generation line”. The fourth generation line makes 6 LCDs (15 inch) at once, but the fifth generation line makes 15 LCDs. Accordingly, its productivity will largely increase. The company said “We will have the production capacity of 120,000 each month in 2003 when this facility of KRW 1,400 billion is completely constructed.

Samsung Electronics who planed to operate the fifth generation production line in October or November, tried all the best to move up a period of mass production to the end of August or beginning of September. Also, Samsung Electronics plans to increase the current production in 2003.

However, international LCD companies have additionally invested to this business. Sharp and Hitachi, Japan is ready for the large investment and Taiwanese LCD companies such as AU Optronics and CPT are in hasty for the fifth generation investment.

Related companies have been concerned about that the LCD price would decreased as the production quantity increased after the second half of the year. LCD was in the business cycle called as ‘Crystal Cycle’. That is, when the business is in prosperous situation, companies invest largely. So, the large investment changes the business worse.

Accordingly, the analysis showed that the announcement in the investment plan of LG Phillips LCD is for preemptive strike against Japanese or Taiwanese companies. As the leading companies take the action of the price decrease, they can check the investment of competitors by obtaining the price competitiveness in advance.

Yeon-Su Shin ysshin@donga.com