And then there were three.
Earlier this week, Japan's newest, biggest display manufacturer, Japan Display, began operations. Japan Display is the joint venture, announced last September, among Sony, Toshiba, and Hitachi. The three companies merged their LCD operations with $2.6 billion from a Japanese government-backed fund. (See: What Does LCD Merger Mean for Apple?)
Japan Display officially opened for business the same day as Samsung Display, which is a spinoff of Samsung Corp. 's display business. Samsung's spinoff and the Japan joint venture instantly position the two display makers -- along with LG Electronics Inc. (London: LGLD; Korea: 6657.KS) -- among the three biggest LCD makers in the world.
With the LCD market struggling to turn a profit as demand and ASPs drop, display manufacturers are consolidating facilities, looking to cut overhead. Just a few weeks ago, another display juggernaut, Sharp Electronics Corp. , got an injection of cash from global EMS provider Foxconn Electronics Inc. (See: Foxconn Shores Up Display Supplies.)
But the LCD market has taken a turn for the worse, according to IHS iSuppli,. For the first time ever, on an annualized basis, the US LCD TV market is expected to decline in 2012:
Shipments in 2012 of flat-panel TVs into the American market are forecast to decline to 37.1 million units, down 5 percent from 39.1 million units in 2011, according to an IHS iSuppli U.S. TV market tracker report from information and analysis provider IHS. Only last year, shipments had inched up 1 percent from 38.6 million units in 2010...
The U.S. flat-panel TV market has never encountered a down year, even at the height of the recession in 2008 and 2009. The decline starting this year suggests that demand may have crested for the mature U.S. TV market, which is driven by consumers replacing their older sets with models boasting newer features—unlike other parts of the world where a vibrant, untapped market exists for buyers making their first-ever purchase of flat-panel sets.
While the consolidation will prop up the LCD market, it might hurt consumers. Fewer suppliers means less competition on price, so LCD prices likely will plateau. Samsung has made its intention clear to focus on next-generation display technologies such organic-light-emitting diodes (OLEDs). (See: OLED Technology Gets a Boost in Samsung-Universal Deal.) OLEDs have a number of technological advantages over LCDs. They are lightweight, power-sipping, and can be manufactured on flexible substrates such as plastic. They are still extremely expensive, however. IHS iSuppli reports:
AMOLED TV prices will remain dramatically higher than those of liquid crystal display (LCD) TVs during the next few years because of manufacturing yield issues, combined with inflated material costs due to the small pool of suppliers. A 55-inch AMOLED TV will be priced at $8,000 in 2012, more than twice the $3,700 average expense for an equivalent LCD TV. And although AMOLEDs deliver a dramatically superior viewing experience compared to LCDs, consumers are unlikely to buy large quantities of AMOLEDs until their prices fall to within a 20 percent premium of comparable LCD TVs.
In the meantime, the display that is getting the most buzz in the market is Apple Inc. (Nasdaq: AAPL)'s Retina display. The patent for the technology is owned by Apple, but Samsung, LG, and Sharp are licensed to manufacture the Retina. LG and Sharp have reportedly had difficulty meeting production demands for the Retina, forcing Apple to declare a shortage of its new iPad the day of its release. (See: Apple Watch: Blame the Displays.)