DisplaySearch expects Gen 5½ and Gen 6 LCD capacity will expand only 19% in 2008. Even with productivity gains, it is hard to imagine how PC makers and TV makers are going to get all the panels they want. Chinese consumers are fired up about the Olympic torch and it's a safe bet they'll want lots of new LCD TV sets to watch the games this summer. US and Australian consumers are cooling down as the economy weakens and it's also a safe bet some will consider LCD TV sets smaller than 42".
LCD suppliers are building new fabs that will start yielding later this year, but those plants are best suited for 42" to 62" panels. There is some flexibility but suppliers, brands and retailers are counting on demand for larger sets. Given the semi-fixed cost per box on the floor, retailers are particularly interested in larger sets because these carry higher price tags and provide more opportunities for warranty or installation sales.
If consumers want more 32" and 37" LCD TV sets, panel supply might constrain the market. While some retailers might welcome supply constraint on the low end of their price range, they might not welcome lost sales as consumers seek lower-prices elsewhere. No retailer, regardless of their price position, would welcome disruptions in their TV supply chain.
