El Segundo, Calif., — After three quarters of declining market share and the loss of its leadership in the Plasma Display Panel (PDP) industry, South Korea's LG Electronics reclaimed the number-one position in the first quarter of 2006, according to new rankings from iSuppli Corp. LG's share of worldwide PDP unit production rose to 31.1 percent in the first quarter, up from 27.5 percent in the fourth quarter of 2005. This put it about one percentage point ahead of Japan's Matsushita, which controlled 25.9 percent of factory units during the quarter. LG last held the top spot in the first quarter of 2005.
The table below presents iSuppli's quarterly ranking of the top-seven PDP panel suppliers based on percentage share of unit shipments.
Table: Top-Seven Plasma Display Panel Manufacturer Ranking (Percentage of Unit Shipments)
Source: iSuppli Corp. June 2006
Koreans come on strong
"LG's rise in market share is due to its capacity additions and the resulting increase in panel output," said Riddhi Patel, senior analyst with iSuppli Corp. "This development reflects a long-term trend of the South Korean PDP suppliers advancing at the expense of their Japanese and Taiwanese rivals."
In the first quarter of 2006, South Korean suppliers LG and Samsung SDI collectively accounted for 54.5 percent of PDP unit shipments, compared to 40.5 percent in the first quarter of 2004. LG and number-three PDP supplier Samsung SDI not only are increasing capacity, but also are improving the quality of their panels and focusing on cost reduction, both at the component and at the production levels. The two South Korean suppliers are migrating to larger fab sizes and cutting more panels from each mother glass.
As the Korean suppliers increase their capacity, Japanese players are losing ground in PDP production. Matsushita is the only Japanese company that is keeping pace with the South Korean players in terms of capacity expansions. The Taiwanese players are exiting the market because they are not seeing much technology transfer from their partners and thus are finding it hard to keep up with the intense competition.
Consolidation is the name of the game
Profitability has been challenging for the majority of the PDP makers, despite rising consumer uptake of plasma TV sets. Beyond lack of profitability, multiple factors are driving consolidation in the market, including swiftly declining panel prices, slower sales growth and increasing competition with alternative technologies in the large-screen TV market. These factors caused Taiwan's CPT and Formosa to drop out of the PDP business, leaving the market with only five major suppliers.
In other market consolidation developments, Pioneer Corp. last year acquired NEC Corp.'s PDP business. Furthermore, Fujitsu Ltd. decided to relinquish its majority stake in Fujitsu Hitachi Plasma Display Ltd. (FHP), in favor of Hitachi Ltd., in order to achieve profitability.
Consumer market the main driver for PDP growth.
Despite increasing competition from LCD sets, consumers continue to be attracted to plasma TVs because of their slim form factor, their rapidly declining prices and their widespread availability. The 42-inch Enhanced Definition (ED) plasma is the cheapest way to own a large-sized flat-panel TV. Prices for these sets start as low as $1,200.
The 42-inch XGA PDP models also are becoming attractive to consumers because of declining prices, and the 50- inch is not far behind. These TVs are available for as low as $1,900, making them very attractive to consumers.
But despite their wow factor, plasma TVs are facing stiff competition from LCD TVs in the 40- to 44-inch range, whose production is rising rapidly. With seventh-generation and 7.5-generation fabs going online during the next couple of years, the LCD panel makers will be able to reduce the production costs of 40-/42-inch panels to match plasma. Because of the sheer scale of their production capacities, the LCD suppliers will be fully capable of having a big impact on plasma in its dominant size range by the 2008 to 2009 timeframe.
The short-term forecast for plasma is aggressive, as the industry tries to capture maximum share while LCD-TVs remain the more expensive alternative.
About iSuppli Corporation
iSuppli Corporation, the global leader in electronics industry intelligence, provides market intelligence services for the EMS, OEMs, and supplier communities. iSuppli employs the world's largest and most experienced staff of component, systems, and application market analysts. More information is available at www.isuppli.com.