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DisplaySearch Hikes LCD TV Unit Forecasts

9/29/2009 12:44:31 PM Eastern

Austin, Texas - Video display market analyst
DisplaySearch issued fourth-quarter forecasts for North American LCD TV
sales Tuesday calling for annual shipment totals to increase from just more
than 31 million units to 34 million units, with all of the increased volume
coming from smaller than 40-inch screen sizes.

The large-screen
portion of the LCD TV market, which DisplaySearch
defined as 40 inches and larger, is expected to grow 25 percent year over year
in 2009, which is about half the pace of 2008 growth.

Shipment volume
for LCD TVs smaller than 40 inches is expected to grow 23 percent in 2009,
similar to 2008 growth levels.

"This is a clear
result of the lower spending power by consumers worldwide in this recession,
pushing them to look at more modest screen sizes when choosing a new LCD TV," stated
Paul Gagnon, DisplaySearch North American TV sales analysis director. "However,
we think this is a temporary effect; as the world emerges from the recession in
2010 and beyond, growth rates for large screen sizes will again outpace smaller
sizes by a more substantial margin."

The outlook in the
U.S.
during the critical holiday selling season will be a measure of how confident
consumers are with the economic recovery, and how far brands and retailers are
willing to go in order to drive store traffic, said Gagnon. "We expect unit
shipments to outpace the weak results from a year ago, but it will take
aggressive promotional prices from major brands and retailers alike to bring
consumers into stores, especially for larger screen sizes, something that is
even more challenging considering key costs have drifted higher in recent
months."

The firm also
increased its expectations for worldwide LCD TV sales from 127 million to 130
million units for full year 2009, representing a 24 percent annual growth rate.

DisplaySearch
attributed the stronger expectations to strong LCD TV shipment growth during
the second quarter in key markets including China
and North America and indications that growth
levels will be sustained through the balance of the year. However, the forecast
for global TV shipments of all display technologies in 2009 was reduced from
the previous forecast by 3 percent to 195 million units for a 5 percent
shipment decline from 2008, as the market for traditional CRT TVs declined
faster than previously expected while flat-panel display makers struggle to
churn out enough product to compensate for the difference.

"The transition
from CRT-based TVs to flat-panel TVs is largely complete in developed regions
worldwide, like North America, Western Europe and Japan," stated Hisakazu
Torii, DisplaySearch TV research VP. "Now the transition to flat is
accelerating in emerging markets like China, and we are seeing sales of
CRT TVs fall faster than flat-panel TVs can grow, mostly due to supply
constraints in LCD TV."

Having recently
started tracking on LCD TVs with higher frame rates (100Hz to 120Hz and 200Hz
to 240Hz), DisplaySearch said the higher-margined/higher-performing models will
account for 31 percent of LCD TV revenues worldwide in 2009 while 200/240 Hz
will take about 5 percent of revenues. By 2013, 100/120 Hz will account for 32
percent of LCD TV revenues, while 200/240 Hz will account for nearly 22 percent.

DisplaySearch said
the global economic recession continues to impact purchases of TVs.

"Consumers still
want to purchase flat-panel TVs, but they are trimming their budgets and
setting their sights a little lower in terms of size and price," the company
said.

A large majority
of the increased shipment forecast for LCD TVs in 2009 is in smaller sizes, less
than 40 inches. As a result, the average LCD TV screen size will be nearly
unchanged in 2009 compared with 2008, after 4 percent growth last year,
DisplaySearch said.

Average sizes were
forecasted to resume growing in 2010 but at a slower rate than in recent years.

Meanwhile, the
price of LCD panels used in TVs has been rising sharply in recent months,
effectively increasing the cost of producing LCD TVs, DisplaySearch observed.

Despite this, LCD
TV average selling prices continue to erode by an expected 22 percent year to
year in 2009. Combined with rising panel costs, the continued price erosion
will have a negative impact on profit margins at many points in the supply
chain, the firm predicts.

DisplaySearch is
still forecasting a revenue decline in 2009, although it has been reduced to a
3 percent drop from 6 percent previously, due to the increase in expected unit
shipments.

 

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