Tuesday, November 25 2003
A shortage of flat-panel display screens, one of the fastest-growing trends in the technology business, threatens to pinch the industry's budding comeback.
A few years ago the sleek screens were an expensive rarity, but their new popularity in everything from computer monitors to television sets left suppliers unable to keep up with the demand.
That could drive up computer prices and make consumers wait for back orders just as the holiday shopping season is set to begin.
"There's been a shortage since the second quarter," said Ross Young, president of DisplaySearch, an Austin, Texas research firm. The shortage was worst in the third quarter, he said, when demand outstripped supply by 5 percent.
That was just when sales of notebook computers soared and electronics companies were churning out their holiday season inventory.
The screen shortage has eased since then as new manufacturing plants have opened in Asia. But the problems the supply dip created are just now reaching consumers. Some retailers are bracing for shortages of big-screen and other flat-panel television sets and computer monitors as the holiday shopping gears up, said Jennifer Gerlach, an analyst with technology research company ARS Inc.
And computer makers, who are counting on sales of notebook computers and televisions to bring them out of the technology downturn, are considering raising prices and are scrambling to make sure they have enough supply to meet expected demand in coming months.
"Flat panels and LCD (liquid crystal displays) are at the top of the minds of everybody right now," said Dell Inc. senior vice president Rosendo Parra. Parra, co-manager of Dell's Americas business, said he spent a good part of his time at the annual Comdex technology conference here talking with suppliers and others on the issue.
Officials from Hewlett-Packard Co. and other companies also said they were worried about flat-screen shortages.
Because of the strong demand, prices for flat panels to manufacturers have increased about 20 percent over the past year, Young said. The price of a 15-inch screen used in laptops, for instance, costs a typical computer maker about $205 today, versus $170 earlier this year.
Until now, computer makers up have postponed passing along those price increases to consumers, in part because they were offset by decreases in prices of other components such as semiconductors .
At the same time, computer makers didn't want to endanger a fragile business recovery buoyed by sales of notebooks and other high-end products. Notebook sales soared by 16 percent between January and September, according to research firm NPD Group, driving a long-awaited general rebound in the PC business.
But pricing policies are likely to change if demand continues as expected.
"Pricing is the great equalizer of supply and demand," said Parra, adding that the company would raise prices on flat-panel products rather than risk running out of them and forcing potential customers to go elsewhere.
Along with notebook computer sales, driving the soaring demand for flat panels are a growing number of new products built around the screens, from DVD players in minivans to trendy thin computer monitors, tablet computers, digital video cameras and other gadgets.
At Comdex here, Dell took the wraps off a third LCD television model. Rival Gateway Inc. has rolled out a dozen flat-panel television sets, mostly in the past year. And traditional TV makers such Sony Corp. and Samsung Electronics Co. are seeing flat-panel TV sales soar.
DisplaySearch estimates shipments of LCD TVs have increased by more than 160 percent and will continue to grow dramatically in the coming months.
The good news, DisplaySearch's Young said, is that the new factories in Asia should help bolster supply in the future.
Sony and Samsung, for instance, announced a $2 billion partnership to build an LCD panel plant last month. And two weeks ago, NEC Corp. and SVA Co. announced a similar partnership.
While the two giant plants won't help with supply problems immediately, they will when they're open, probably next fall.
Source:
http://www.ecommercetimes.com/
