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Samsung Electronics Sees LCD Prices Falling
 07/15/2004 South Korea (Reuters) - Samsung Electronics Co. Ltd., the world's top flat-screen maker, said on Thursday it expected prices of liquid crystal displays (LCD) to fall as much as a fifth by the end of the year on growing supply. The downbeat outlook came as Samsung and Japan's Sony Corp. launched a joint venture in central South Korea to make LCDs, adding to a surge in new production that is pushing down screen prices. The news also preceded an initial public offering by rival LG.Philips LCD Co. Ltd., which plans to price its $1.3 billion to $1.6 billion share sale later in the day. The company has cut the target price of its shares twice because of investor worries over falling screen prices. "We expect prices for smaller-sized panels (14-15 inch) to fall 10 percent and the larger ones (17-19 inch) to fall as much as 20 percent in the second half," Cho Yong-duk, a vice president of Samsung's LCD division, said on the sidelines of a ceremony to launch the joint venture, called S-LCD Corp. "June, July and August are low demand months so there will be oversupply, but we expect prices to recover from September," he said. South Korea's Samsung and Sony, the world's largest consumer electronics maker, plan to invest 2.1 trillion won ($1.8 billion) in the venture, which will have a production capacity of 60,000 panels a month. Mass production at a new plant is slated for the second quarter of next year. The venture will give Sony a steady supply of flat screens, guarantee Samsung a large customer and increase the chances of Samsung's screens becoming an industry standard. DELAYING PURCHASES But the LCD industry's outlook is clouded by expectations of a glut of thin screens for computers and TVs. Japanese consumer electronics maker Sharp Corp., the world's largest maker of LCD televisions, warned on Wednesday of price declines as competitors ramp up their output capacity. Consumers are delaying purchases of LCD TVs and monitors expecting prices will fall, while set makers want to keep their inventories light. Analysts see prices of 17-inch LCD screens falling as much as 25 percent by the end of the year from the first-quarter peak and have cautioned about weaker demand for larger panels. Cho said his forecast of up to 20 percent referred to the difference between prices at the end of June and the end of December. Independent research group DisplaySearch forecasts the price of 28- to 32-inch LCD panels will fall 15 percent in 2004 from 2003 to $975. The new joint venture is essentially 50-50, but Samsung would have two more shares than Sony to speed up decision making. S-LCD Chief Financial Officer Keiji Nakazawa said Sony might consider setting up a TV set plant in South Korea that would use LCDs supplied by the joint venture. The venture's "seventh-generation" plant will use glass plates with an area of 1.87 meters (6 ft 1 in) by 2.2 meters (7 ft 3 in) to produce wide screen televisions at a lower cost than rivals' smaller "sixth-generation" plants. Shares in Samsung Electronics fell 2.27 percent to 408,500 won, while Sony was up 0.5 percent at 4,010 yen. Merrill Lynch slashed its target price for Samsung Electronics shares by 26 percent on Thursday, reflecting concerns over falling margins in the display and mobile phone businesses. It cut its target price for Asia's most valuable technology firm to 700,000 won from 950,000 won, but maintained a "buy" recommendation for Samsung Electronics, the world's biggest maker of memory chips. News Archive | |
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