To judge from the news out of Korea, it was a very merry Christmas, indeed, for the world's manufacturers of LCD television sets -- and demand remains strong. On Monday, both of the world's leading manufacturers of the flat panels that form the most valuable part of an LCD television set announced accelerated opening dates for their newest "seventh-generation" panel plants.
Samsung, No. 1 in manufacturing LCD panels, began operations at its $4.1 billion "7-2" manufacturing plant on Sunday -- a full three months ahead of schedule. Not to be outdone, archrival LG Philips
The reason for the focus on big screens: IT news source DigiTimes attributes it to worldwide enthusiasm for the upcoming World Cup soccer tournament. Apparently, just as some Americans are willing to plunk down thousands of dollars in order to place a bigger, better screen in the living room on Super Bowl Sunday, so too is everyone else in the world willing to "invest" their hard-earned cash in getting a better view of that other brand of football. With the main event due to begin in June, now's the time to practice "bigger-is-better" manufacturing.
Meanwhile, back in Amsterdam
Meanwhile, at the same time as LG Philips opens its 7-G doors, parent company Philips is heading for the door -- or at least sidling in that general direction. In mid-December, Philips announced that it will report an additional 210 million euro profit in Q4 2005 as a result of paring its stake in LG Philips to 32.9%. For comparison, in July 2004, before LG Philips' IPO, Philips owned a 50% stake in the joint venture. Post-IPO, that stake fell to 45.4%. In July 2005, Philips announced its intention to sell 1.9% more. And now, its stake has declined to 32.9%.
This suggests that, although there's no doubt that LCD TV sales are accelerating, Philips isn't so sanguine anymore about the profitability of this market. With prices for the sets falling 20% per annum, though, you can't really blame them.
Want to learn more about the investment potential of the LCD producers? Read:
- A Sharp Cut to LCD Profits?
- Sony's Spin Sputters
- Big Deal for Little Screens
- Sharp's Enormous LCD TV
Fool contributor Rich Smith owns no shares in any company mentioned in this article.