The Flat Panel War Widens

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Consumers hoping to see evidence that flat panel TV prices will decline in their lifetimes got some more good news yesterday. A new joint venture among Japan's electronics giants is in the making, one that will be able to give both LG Philips LCD (NYSE: LPL) -- a joint venture between LG Electronics and Philips (NYSE: PHG) -- and the private venture between Samsung and Sony (NYSE: SNE) a run for their money.

The new entry into the flat screen production fight will consist of Hitachi (NYSE: HIT), Matsushita Electric (NYSE: MC), and Toshiba. This latest consortium expects to begin churning out flat panel displays (as opposed to the two previous consortia, which focus on making just the glass for the displays) by as early as 2006. So it's still a relatively far-off plan, and at just $1 billion in investment, it's also not anywhere near the scale of the combined $40 billion in investments that the two previous teams intend to invest into LCD production.

Nonetheless, the greater competition among the players in this business, and the increase in production capacity (which should reduce costs per panel), can only be good news for the world's TV buyers. According to industry sources, the global market for flat panels is currently in the neighborhood of 3 million sets per year right now. But that number is almost certain to grow as supplies of the sets expand and prices fall. According to Hitachi, Matsushita, and Toshiba, the market will be able to absorb as many as 15 million flat panels per year by the time their production line is up and running. Ultimately, these three electronics giants aim to capture as much as one-sixth of total market share.

The rest of the market will be divvied up primarily among current leader Sharp, close second Sony, and U.S. contenders Dell (Nasdaq: DELL) and Gateway (NYSE: GTW). But that likely won't be the case for long. DVD players were once a hot, new technology, pioneered in Japan, later outsourced for production in China, and lately being produced in great numbers by Chinese companies on their own behalf.

With any luck (for consumers -- with less luck for investors in the Japanese electronics makers), the same thing will happen with flat panel TVs, and sooner than anyone now anticipates.

For more Fool news on developments in the LCD/plasma industry, read:

• Monitoring Flattened Screen Sales
• Philips' Future Gets Smudged
• Corning Comes Through
• Flat Panels Fire Up Fuji

Fool contributor Rich Smith owns no shares in any company mentioned in this article.