It's a classic dilemma for any flat-panel TV maker do you expand or not. But for plasma TV manufacturers, the question goes beyond the usual hand-wringing about whether to spend on more super-efficient factories now to reap cost advantages later. That's because by 2009, companies like Matsushita Electric who trade as Panasonic, LG Electronics and Samsung could get hammered by falling revenues, as competition from the dominant flat-panel technology, liquid-crystal displays, drives down prices and undercuts their profits.
According to market research firm iSuppli, revenues, estimated at $7.7 billion last year, could peak at $10.2 billion in 2008 before falling back to $8.7 billion in 2011. The decline is expected to come despite rising sales of the specialized glass panels for plasma TVs, which could more than double from 10 million last year to 23.6 million in 2011.
The not-so-upbeat outlook explains why most plasma-panel makers aren't eager to ramp up production. This year only one company hasn't curtailed production: Matsushita. Says iSuppli's Riddhi Patel: "Most panel makers have cut their production utilization rates to around 70%—except for Matsushita, which remains at 100%."
