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LCD TV production booms, but cost jump trims earnings
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China produced more than nine million LCD TV sets in the first eight months, an increase of more than three quarters.


But domestic manufacturers saw their profits dim as a result of increased panel costs, the Ministry of Information Industry said yesterday.


China turned out 9.39 million liquid-crystal-display TVs in the first eight months, 77.1 percent more than in the same period the year before.


LCD TV production accounted for 20 percent of China's total TV manufacturing capacity. The country is the world's biggest producer of televisions, according to the ministry.


"Flat-panel-display TVs, including LCDs and plasma sets, have become the first choice of buyers, especially in major cities," the ministry said in a statement.


SVA Group recently announced it had quit the money-losing cathode-ray-tube business to focus on the flat-panel-display sector.


Domestic LCD TV makers, however, are facing a tough time despite the popularity of the product.


The average profit margin for domestic LCD TV makers is now only 2.3 percent, compared with the electronic industry's overall profit of 3.5 percent, the ministry said.


As a result of intense competition, LCD TV prices have plummeted, especially for 32-inch models. Domestic TV makers, including Changhong, TCL and Skyworth, are facing problems as upstream LCD panel costs have risen and supplies have dwindled.


For example, a 32-inch LCD panel is expected to cost US$319 in the third quarter compared with US$303 in the second quarter and US$305 in the first quarter, according to DisplaySearch, a US-based research firm.


"In addition to suffering the price increase for LCD panels, domestic makers are finding it difficult even to get them," said Zhang Bing, a senior analyst at DisplaySearch.


New products such as public advertising displays and digital photo display frames have fueled the demand for LCD panels. Meanwhile, most panel makers are preparing for Christmas orders, Zhang said.


(Shanghai Daily October 8, 2007)


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