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Consumers are moving away from plasma in droves. At the same time prices are dropping.

Samsung the world’s top plasma display panel maker, expects plasma panel prices to stabilise with a fall of 3-5 percent in the third quarter and 1-2 percent in the fourth, a company executive has said.

 

Prices of plasma panels, a key component of plasma flat TVs, have collapsed in the last two years after manufacturers aggressively ramped up production, betting that consumers would snap up flat panel TVs to replace bulky cathode-ray tube models.

 

“The fourth-quarter price fall will be 1 to 2 percent…. In the third quarter, prices are expected to fall in a range of 3-5 percent,” Chris Kim, vice president of Samsung SDI’s plasma sales and marketing team, said at the Reuters Asia Technology and Telecoms Summit in Tokyo. The price of plasma  slumped about 18 percent in the first half of 2005. Samsung SDI’s plasma operation competes with No. 2 player LG and third placed Panasonic who trade as Matsushita Electric Industrial.

 

Kim confirmed that his company’s plasma operations, which generate roughly 30 percent of total revenues, are expected to break even this quarter after two consecutive quarterly losses. “I guess we’re reaching a point where we can recover what we’ve invested for many years,” he said. Reflecting an easing price fall, shipments in dollar terms will increase in the third quarter, reversing a 6 percent drop in the second quarter from the previous quarter, Kim said.

 

Plasma sales amounted to 350 billion won in the second quarter versus 373 billion won in the first quarter as a sharp price fall offset an increase in unit sales. Kim said Samsung SDI had yet to decide on a new investment plan to boost capacity.

“We have three lines, and number four is in plan,” he said. “Within a year or two we’ll be operating the number-four line.”

 

Thwe drop in demand and price has not detered manufacturers. LG Electronics said last month it would boost output capacity by 63 percent to 310,000 panels per month in September as it started operations of a fourth production line, and it plans to further boost capacity to 350,000 panels next year.

 

Matsushita plans to start operations in September at a new plasma display panel plant in Hyogo prefecture, western Japan.

 

Matsushita’s plant will have initial output of 1.5 million panels per year, a calculation based on 42-inch panels. Output will be ramped up to 3 million units per year in late 2006, boosting the company’s total annual output to 4.8 million units. Manufacturers of large sets over 40 inches using either LCD or plasma technology are spending aggressively on technology to make cheaper sets and draw consumers away from boxy, smaller cathode-ray TVs.  

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