Flat panel TV to boost its fortunes in the region

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The Middle East's growing reputation as a hub for the consumer electronics industry has made it one of the leading global markets for FPTV vendors.

With consumers adopting FPTVs in record numbers, many vendors are reporting massive increases in sales, shipments and profitability.

Industry analyst IDC predicts that consumer anticipation for the introduction of high definition television (HDTV) broadcasting and next-generation DVD players are likely to spur growth in the Middle East FPTV market in 2007.

Taiwanese vendor BenQ is relying on the performance of its liquid crystal display (LCD) TV range to boost its fortunes in the region.

"In the Middle East, we expect a 226% growth in the number our unit shipments," reports Manish Bakshi, general manager of BenQ Middle East and Africa. "We estimate that our total shipments will increase from 72,000 to 235,000 by 2009."

Bakshi cited recent reports that predicted the global FPTV market would grow 400% by 2009 to be worth around US$85 billion, with shipments exceeding 101 million annually.

Bakshi says the Middle East is almost "twice as valuable" to BenQ in terms of sales compared to Europe, adding that the company's entry-level VA series of LCD TVs are enjoying "unprecedented" demand in the region's emerging markets.

"LCD TV sales have been strong across the Middle East and the huge demand for LCD in niche markets such as Kuwait proves the future of digital entertainment lies very much in these products," adds Bakshi.

Samsung Gulf cites research by market analyst DisplaySearch which ranks the Korean juggernaut at the top of the global TV market during the third quarter (Q3) of 2006, recording sales of 5.1 million units and revenues of around US$3.8 billion.

DisplaySearch placed previous market leader Philips in second position in terms of unit shipments in Q3, 2006, with an 11.7% market share. Meanwhile, Panasonic closed the third quarter with 12.3% revenue share, while Samsung consolidated its position at the top of the market with 15.5%.

The report also states that Sony ranked third in terms of revenue share throughout the opening three quarters for 2006, eventually falling to 10.9% Q3, 2006.

Both Samsung and Sony plan to leverage their combined manufacturing prowess through their joint LCD production venture S-LCD Corp, based in Tangjeong, South Korea, to shore up their dominance of the global LCD market having occupied the top two positions throughout the first three quarters of 2006. Sony eventually trailed their Korean partners in Q3 on 15.2% with Samsung leading with 15.6% revenue share.

The two companies predict the US$1.9 billion venture will increase S-LCD's output to 125, 000 mother glass substrates per month by October 2007.

"Once our 8G line is up and running, we will assume the leading position as a LCD TV panel manufacturer for the 50-inch LCD TV range," claims Won-Kie Chang, CEO of S-LCD.

Sharp has leveraged its eighth-generation manufacturing facilities at its Kameyama Plant No. 2 to double its 40- and 50-inch LCD screen manufacturing capacity to 30,000 substrates per month and claim they will be able to manufacture 22 million sets during 2008, calculated in 32-inch LCD TV equivalents.

"This will enable us to maintain our number one worldwide market share of approximately 15%," claims Takashi Nakagawa, corporate executive director and group general manager of the International Business Group at Sharp Corporation.

The rise in consumer demand for FPTV technology has led some industry analysts to predict a shortage of LCD panel displays for the fiscal year beginning March 2007.

This recently prompted S-LCD to begin production of its 46- and 52-inch glass substrates ahead of schedule.

"At the moment there is the possibility of a shortage [of LCD screens] in the second half [of 2007]," said Sang-wan president of Samsung's LCD business at a recent press conference.

Sang-wan also commented that consumer demand for larger LCD screens would stimulate the market in the 40-inch-plus segment. "Size standards keep changing, the next industry-standard will be 46-inches and by 2008 the 52-inch and higher panel market will grow rapidly."

The anticipated shortage of LCD screens and continued increase in consumer demand for large screen FPTVs has led LG to turn to its plasma display panel segment (PDP) to revive its fortunes in the flat panel television market after its LCD production company LG.Philips – a joint venture with fellow consumer electronics vendor Philips – posted a loss of US$184 million for the three months ending December 31, 2006.

LG counters Samsung's claims that 'size matters' by stipulating that it would emphasise its product features to prove a point of difference in the upper-end of the FPTV market.

"We'll be concentrating on the value-added aspects of our high-end products such as the 'Time Machine' capabilities across our LCD and plasma screen models using DVR technology and LG's exclusive XD engine. Display size is no longer the most important factor in the high-end market," says Hamad Malik, director of corporate communications and marketing at LG MEA.

The company expects its policy of targeting consumers with large disposable incomes will help it achieve its target of 117% growth in terms of units sold in the Middle East this year.

The company expects a 36% increase in terms of PDP unit shipments in the Middle East in 2007, but insists that the improved margins that characterise this product category would compensate for diminished returns in the ultra-competitive LCD market.

With the majority vendors committed to LCD and PDP production, cathode ray tube (CRT) televisions are facing extinction. However, some vendors are reporting a healthy turnover in the region's developing markets.

"CRT is a significant market in terms of pure numbers and turn over, especially in the developing markets in MEA," claims Leonard D'souza, general manager of G-Hanz.

"Although the GCC is projecting a stagnation in CRT sales, markets such as Saudi Arabia, Yemen, Oman, Sudan, Egypt and Nigeria, still offer attractive volumes to companies with competitively priced CRT sets."

G-Hanz also claims that the lack of competition from the Middle East's CRT market poses an attractive offer for entry-level brands unable to compete with the market leaders in terms of profit margins.

"The prices in the CRT market have stabilised and there is less pressure from the major brands," claims D'souza. "The burgeoning middle classes in the region has added to the demand for large screen CRT sets in the MEA market. I think this will be the case for some time in the region."

The fall in retail prices and rapid development in display technology has undoubtedly led to a more diverse FPTV market as vendors scurry to exploit untapped consumer demand.

LCD technology is widely regarded as the saviour of the market as the competitive nature of the Middle East market means the region's consumers are demanding higher product performance at reduced cost.

With the industry's 'big three' – Samsung, Sony and Sharp – set to do battle in the eighth-generation substrate field it appears that LCD technology will eclipse the CRT and PDP segments in terms of numbers in the coming years.

Source : Ronan Shields

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