From Competition to Cooperation: Matsushita & Hitachi and the Future of Plasma
May 31st, 2007By Jin Kim, Director of TFT LCD Market Research, and Ross Young, President and Founder
This is a follow-up to Jin’s original blog post about competitors establishing agreements to cooperate. The original post reported on LG and Samsung getting together to form the Korea Display Industry Association (KDIA) with prodding from South Korea’s Ministry of Commerce, Industry and Energy. The two companies agreed to procure LCD panels and plasma display panels (PDPs) from one another. The post ended with a question about how flat panel suppliers in Japan and Taiwan would respond.
Well, two Japanese suppliers have responded. Matsushita Electric Industrial Co. and Hitachi Ltd. agreed to supply each other with PDPs. Matsushita, the company behind the Panasonic brand, is the world’s largest plasma panel manufacturer with a 31% share in Q1’07 according to DisplaySearch’s Quarterly PDP Module and TV Shipment and Forecast Report, and Hitachi was #4 with 10% share for a combined share of 41%. Conversely, LGE and Samsung SDI had 27% and 24% shares, respectively, for a combined share of 51%, giving the Korean suppliers an advantage and making the Matsushita-Hitachi collaboration an appropriate response to the Samsung SDI-LGE collaboration. Interestingly, on a PDP TV set basis, Panasonic was #1 with a 29% share and Hitachi was #4 with an 8% share for a combined 37% position; LGE and Samsung were #2 and #3, respectively, for a combined 36% share—giving the Japanese TV brands a slight edge.
Hitachi and Matsushita are also collaborating with Pioneer as part of the Advanced PDP Development Center (APDC) where they are working on 10 lumen per watt technology among other areas. This potential 4X increase in luminous efficiency has the promise of reducing PDP costs by 33% while also offering a 2X increase in brightness and a 4X increase in contrast and is reportedly two years away from mass production. The Korean PDP manufacturers should also collaborate in this area as part of the KDIA.
PDP cost reduction, collaboration and market rationalization is needed as they lose share in the rapidly growing 40-44” space and the 50” and larger market remains too small to keep their PDP factories at high utilization levels. The PDP share of the 40-44” global TV market has declined from 65% in Q1’06 to 41% in Q1’07 while the LCD share has surged from 23% to 58% as shown in the figure below. Interestingly, despite these share gains, 720p LCD TVs are selling at a premium relative to PDPs although the price gap has narrowed to around 5%. Looking forward over the next six months, PDP TV manufacturers have the opportunity to widen the current price gap as LCD TV panel prices stabilize on tight large-area supply while PDP TV panel prices continue to fall at a rapid rate. While prices for comparable 42” 720p LCD and PDP panels including power supplies and optical filters were in relative parity from October to March, PDPs may be able to open up as much as a 17-18% advantage in 2H’07. Will it help? It should certainly help in regions where HD broadcasting is less common such as the developing world, but in the US, Japan and Western Europe, we are seeing strong interest in 1080p resolution which favors LCDs as only Panasonic is expected to introduce 42” 1080p PDP TVs and the volume is expected to be relatively small. Even with more than a $500 premium vs. 720p, 1080p LCDs have quickly gathered a 30% share of the US 40-44” flat panel TV market.
Global 40-44” TV Unit Share by Technology
Another opportunity for PDPs is in the 50” 1080p market. Once Panasonic entered this segment in mid-April, the PDP share of the 50-52” 1080p flat panel TV market has surged from 4% to 23% over the past six weeks according to the DisplaySearch/NPD report This Week in TVs. Panasonic is selling its 50” 1080p PDP TVs at 8-28% lower than 52” 1080p LCD TVs from Samsung, Sharp and Sony. In addition, 50” 1080p PDP costs will certainly fall as more players enter with Samsung the next brand to enter. In addition, PDP panel suppliers are expected to move to single scan solutions as early as Q3’07, which could drop costs by another 5%. On the other hand, 52” LCD TV costs may not fall as fast as they add cost through 120Hz, LED backlights to boost motion and contrast performance, and so on. While 1080p plasma TVs match LCD resolution and offer excellent motion performance, they are not as bright as LCDs and not as bright as 720p plasma TVs due to the smaller cell sizes.
Which TV would you buy: a 50” 1080p PDP or a 52” 1080p LCD for 10% more and why?
www.displaysearch.com