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Toshiba Expands TV Production

6/05/2006 02:00:00 AM Eastern

Expecting significant growth in flat-panel TV sales in 2006, Toshiba has expanded supply and assembly operations to ensure adequate inventories of LCD TV and plasma products in 2006, Toshiba television marketing VP Scott Ramirez said.

The company is expanding its LCD sources in 2006, using Taiwanese panel manufacturers AUO and Chi Mei, to supply products worldwide. Toshiba said those deals “will prioritize Toshiba” in getting supply.

In 2007, Toshiba will open a joint venture ALPHA IPS LCD plant with Matsushita and Hitachi.

For plasma, Toshiba is acquiring panels from LG through a worldwide partnership that will also prioritize Toshiba, executives said.

For final assembly, Toshiba is focusing operation at its TMX plant in Mexico on 26W-inch and above LCD TV final assembly, moving circuit-board assembly and plasma assembly to separate Asian factories.

“Not only does [TMX] concentrate on LCD, but there has been a 300 percent expansion in LCD final assembly at the facility, ensuring that we have the production capacity to fulfill the needs of our retailers and consumers,” said Ramirez.

Similarly, he said production has ramped up at the new Asian plasma TV final assembly operation to ensure supply keeps pace with the category growth rate.

Meanwhile, Ramirez said projection TV peaked in 2004 at just over 3.5 million units. In 2005 it was just under 3 million units and in 2006 sales should hit 2.4 million units, he said.

Microdisplay rear-projection models should exceed 2 million units this year. In the first quarter of 2006, projection TV sales were down 11.5 percent but microdisplay rear-projection TV sales were up 2.3 percent.

“This is still a major profit category at 2 million units and now shifting to 1,080p,” said Ramirez.

Flat-panel TV sales continue to grow, he said, adding that 5.8 million flat-panel TV units were sold in 2005, and that level will more than double to 12.5 million units in 2006, growing to 17.3 million in 2007 and 20.6 million units in 2008.

In the first quarter of 2006, plasma sales were up 131.9 percent and LCD TV sales were up 187.1 percent.

Looking at the cost structure of the products, Ramirez said 77 percent of the cost of LCD TV comes from the panel, meaning that “as we reach parity in the cost of the panels [between LCD and plasma], LCD will have a long-term advantage in the flat-panel category,” Ramirez predicted.

The company said it expects to see the “retail parity” of 42W-inch plasma and 42W-inch LCD TVs very quickly, “potentially by the fourth quarter of 2006, and certainly by the fourth quarter of 2007.”

In the 50W-inch screen sizes, Ramirez said plasma will continue to dominate flat-panel TV sales for the foreseeable future.

Screen size market drivers in LCD TV were 26W inches and 32W inches last year and will continue to be in 2006. In plasma the 42W-inch and 50W-inch screen sizes continue to drive growth.

Due to the predicted parity in pricing, 42W-inch will become “a major factor in LCD TV sales,” in 2007, Ramirez predicted. “It will be very interesting to see if the consumer votes for LCD or votes for plasma.”

Meanwhile 50W-inch DLP continues to offer strong value at almost $1,000 less than a 50W-inch flat-panel TV, and a majority of DLP sales will offer 1,080p resolution next year, Ramirez said.

Toshiba said that last year its sales of projection TVs grew 9 percent, accounting for 11 percent market share. In microdisplay, the company saw a 249 percent increase in sales year-over-year, reaching 10 percent market share of the category.

In LCD TV Toshiba said it saw 200 percent unit sales growth, good for 5 percent market share last year, and its plasma TV sales grew 300 percent to take 3 percent market share.

In 2006, the company expects to see its microdisplay market share increase to 14 percent, its LCD TV market share double to 10 percent and its plasma share double to 6 percent.

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