A Case for Buying Foreign Goods

Independent research firms Stanford Resources and iSuppli are predicting that the supply of 10-inch and larger flat-panel displays (FPDs) for the second and third quarters will exceed demand by 6% and 5.4%, respectively. Demand is expected to rule by 4.3% in the fourth quarter, and 2005 is expected to be well-balanced. But, the general trend is toward meeting or exceeding demand, and that's a good thing for consumers, manufacturers of certain components, and fabless U.S. technology firms.

Most FPDs are manufactured in Asia. If demand can be met or exceeded, it would help to bring prices down on flat-screen televisions, computer monitors, and notebook computers. Overall demand would then increase. And that would be good for companies that make certain components, such as Corning (NYSE: GLW  ) , which is the leading glass supplier.

It could also be good for fabless technology companies that design and develop products, but outsource or license the manufacturing. That's more appealing to venture capitalists in the U.S. who are no longer interested in risking the large amount of capital it takes to establish a manufacturing facility here. One such listed company doing this is SpatiaLight (Nasdaq: HDTV  ) , which manufactures displays for high-resolution applications such as rear-projection computer monitors, high-definition televisions, and projectors. There are at least another half-dozen start-ups and private companies in the sector.

I see that trend as the offsetting solution to the global outsourcing dilemma. If we're going to buy goods from overseas companies, at least some of those profits make it back into the U.S. It's hard to contemplate a case where buying more goods from Asian companies actually could mean more profits for companies here and more high-paying technical jobs.

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Fool contributor Mark Mahorney doesn't own shares of any companies mentioned.

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