LCD winning in TVs, plasma to fight back

By Rhee So-eui and Kiyoshi Takenaka - Analysis

SEOUL (Reuters) - As happy consumers hail tumbling TV prices and dream of the biggest flat-screen size their living rooms can accommodate, Sony Corp. (6758.T: Quote, Profile, Research, Stock Buzz) and other LCD makers are emerging as the winners of a long, pricey TV war.

But their battle with rival plasma screens isn't over yet and makers of plasma display panels (PDPs) such as Matsushita Electric Industrial Co. Ltd. (6752.T: Quote, Profile, Research, Stock Buzz) and Samsung SDI Co. (006400.KS: Quote, Profile, Research, Stock Buzz) are likely to strike back as the industry standard moves to bigger TVs.

Plasma screens, which once dominated the 40-inch-and-larger TV market with cheaper price tags and a more natural picture quality, have lost ground as liquid crystal display (LCD) makers have been able to roll out bigger screens at cheaper prices by introducing larger production lines that cut down on costs.

Plasma makers have also until recently failed to offer full high-definition screens in the sub 50-inch market, as it costs more to make the upgrade for plasmas than for LCDs.

As plasma's popularity dwindles, some analysts fear plasma makers are at the risk of becoming a niche market player.

"The 50-inch-and-up market is the only segment plasma has an advantage for now," Hyundai Securities analyst Jeff Kim said. "LCD has won the battle with better picture quality as consumers went for TVs better suited for digital broadcasting."

Japan's Sharp Corp. (6753.T: Quote, Profile, Research, Stock Buzz), the world's third-largest LCD TV maker, last month posted a record annual profit for the fourth straight year, while Pioneer Corp. (6773.T: Quote, Profile, Research, Stock Buzz) and Hitachi Ltd. (6501.T: Quote, Profile, Research, Stock Buzz) have been losing money on their plasma TV business.

South Korean plasma panel maker LG Electronics Inc. (066570.KS: Quote, Profile, Research, Stock Buzz) and Samsung SDI also posted quarterly losses hit by sliding prices. LG's chief executive last month denied a market talk that the company would sell its plasma business after its poor performance spurred such speculations.

Confirming the grim picture, plasma panel shipments fell for the first time from a year ago in January-March, down 1 percent to 2.3 million panels, according to research firm DisplaySearch.

But it's not all doom and gloom for plasma TVs.

Leading player Matsushita, which controls one-third of the global plasma TV market, has been able to weather the industry's sharp price falls thanks to its brand name, cost cuts and economies of scale.

The Panasonic maker and maybe a few others can maintain an edge in the upcoming battle with LCD TVs, analysts say.

SECOND ROUND IN BIGGER TVS

Plasma TV sets use tiny pockets of gases to display images and displays more natural color. LCDs use crystals sandwiched between glasses and a backlight unit, boasting of brighter, high-resolution images.

As falling prices encourage consumers to look for bigger TVs, the two technologies are set to fight fiercely again in a new market: TVs larger than 40s-inch.  Continued...