THE FRONT LINE: NOVEMBER 20, 2005
Falling Plasma and LCD Prices Have Japan Reeling
Pioneer Electronics, stung by falling prices and lower-than-expected sales numbers of plasma TVs and DVD recorders, announced its chairman, Kanya Matsumoto, and president, Kaneo Ito, would step down this morning as the company prepares to announce at least a $200 million loss for the end of fiscal 2005.
Pioneer, which had originally forecast shipments of 800,000 plasma monitors and TVs for fiscal 2005, has revised that forecast down to 640,000 units and has closed two of its six operating plasma fabrication lines. More shutdowns may be coming as about 1,000 jobs are to be cut from the company’s Japanese operations. (Source: Nihon Keizai)
It is beginning to look like Pioneer’s acquisition of the former NEC plasma manufacturing facility in early 2004 may not have been the best use of their financial resources, and that an investment in PDP manufacturing in China was probably the smarter move.
There is no question that the balance of power in flat-panel display manufacturing and sales is swinging to Korea and China with each passing quarter. Prices for LCD TVs continue to plummet at retail in anticipation of the holiday selling season, and plasma TVs are in similar free-fall.
You’ll likely see 42-inch EDTV (852x480) plasma TVs at $999 retail by the second quarter of 2006, with 42-inch HD (1024x768) plasma TVs close to $1500 and 50-inch models at $2500. Comparable products sold for twice that a year ago.
Matsushita, the parent company of Panasonic, has made substantial investments in Chinese PDP fabrication lines going back to 2004, while Hitachi recently announced it would move all plasma production to China at its Hitachi Fujian Digital Media subsidiary, in an attempt to cut production costs and remain competitive globally.
Of the remaining flat panel TV manufacturers, only Sharp continues to operate LCD manufacturing facilities exclusively in Japan, with a Gen 6 line producing sets as large as 65 inches. That will no doubt change with continued downward pricing pressure from industry giants LG Philips and Samsung, and second-tier Chinese companies including AUO and CMO.
