Will the Surge in PDP Shipments Continue Through the End of the Year?

By Ken Park – Senior Manager, Korean FPD Market and Technology Research, DisplaySearch

According to PDP panel module shipment data in the Global TV Shipment and Forecast Report, PDP module shipments had 42% and 49% Y/Y growth in Q1’10 and Q2’10, respectively. Samsung SDI and LGE are squeezing more from their capacity, and COC is expected to ship its first 42” PDP modules from its own line from Q3’10. Of course Panasonic always leads PDP module volume, for both TVs and public displays.

During its Q2’10 investors meeting, Samsung SDI announced that it expects PDP module shipments to reach 18.2 million in 2010. DisplaySearch estimated PDP module shipments of 14.8 million in 2009, so SDI’s forecast would mean 27% Y/Y growth. The rapid growth in demand is supported by figures from The NPD Group’s US retail weekly tracking service, which shows year-to-date PDP TV sales in July more than 70% higher than the same period in 2009, compared to flat sales for LCD TV.

Why is PDP growing so rapidly? And is the growth sustainable, or just temporary? Some believe that 3D brings new opportunities specifically to PDP as it seems to have some distinct advantages, rebalancing the relative advantages of the two technologies. However, 3D TV is not yet a major driver for PDP module shipments. For example, LGE just launched its first 3D PDP TV this week, but its PDP TV shipments have increased significantly from the first quarter of this year. It is possible that there will be an impact in 2H’10.

Rather, we can identify four key elements of PDP’s remarkable growth against LCD in the TV market:

• Inflated LED-backlit LCD panel pricing—A limited supply of LEDs has kept LED-backlit panel pricing from falling, meaning that LCD TV retail prices have not fallen as quickly as last year, even during promotion periods, for example China’s golden weeks and the World Cup.
• LED supply and costs—The LCD industry may have scored an ‘own goal’ by launching LED-backlit sets before the supply chain was prepared. CCFL has been devalued by the new technology, and at the same time LED sets have been perceived by many consumers as too pricey.
• Similar design to LED-backlit LCD TV—To most consumers, it’s not easy to differentiate between LCD and PDP TV, and with the remaining proponents of PDP also in the LCD business, any negative image of PDP TV has substantially disappeared.
• Feature sensitivity—LED-backlit LCD TV sets are equipped with more valuable features, but large CCFL LCD TVs do not have as strong a value proposition. Consumers looking for value find a large (42” or 50”) PDP TV with similar features to smaller LCD TVs.

What if LED-backlit LCD TV prices fall to what we think is in line with consumers’ expectations? Would PDP TV be able to compete? It will be very difficult. Of course the LED supply shortage may prevent a sharp drop in LED-backlit LCD TV street prices by the end of this year, but panel prices will likely begin falling this month. When such cuts are reflected in retail set prices, we will have a real test of the durability of the PDP TV sales surge.