Japans LCD producers suffer on prices

02/01/1999

Japan`s LCD producers suffer on prices

Japan`s LCD manufacturers have revised their sales forecasts for the current fiscal year, with shortfalls running from 6% to almost 40%. As a result, most of the companies are also cutting planned capital investment beyond earlier levels, which had already anticipated a drop of more than half from the previous FY. It now appears that FY98 spending will be just 28% that of FY97.

Production lines have generally been running at full speed, but with LCD prices dropping drastically due to over-capacity, sales in yen have not kept up and will come in just barely above last year (see table). A 22% increase had been anticipated at the beginning of the fiscal year.

Japanese market observers say LCD panel pricing has dropped by 30% over the last six months. As a result, "no LCD firms in Japan could get profits for the first half of the FY." In an effort to survive, major companies are trying price increases of 10%. A Hitachi spokesman said pricing has been governed from the South Korean side of the industry, and will be to a greater degree in the future. Thus, it will be difficult to get price increases to stick.

According to Japanese industry observers, Taiwanese companies are likely to arrive in force in the LCD sector in 2000, further increasing competitive pressure. NEC will likely become the number two firm, and perhaps becoming number one in the future. -P.N.D.