You know that global consumers are emerging from their funk when they levitate off their couches to go buy bigger televisions. So the latest tidings from technology tracking consultancy DisplaySearch appear particularly promising. According to a report released by the firm on Tuesday, TV shipments in the third quarter were up year-over-year on a unit basis for the first time in 12 months. Revenues from sales of TVs are expected to rise in the first quarter of 2010, turning around a six-month decline. Driving this surge in demand is the consumer's desire for bigger, faster and brighter boob tubes.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Based on these latest numbers, DisplaySearch anticipates that total TV shipments will rise from 205 million units in 2009 to 218 million units in 2010, a 6% bump after 2009's 1% decline. All major markets appear to be recovering, with demand in China leading the way as more and more middle class people in the Middle Kingdom buy big flat-panel TVs. Said Hisakazu Torii, vice president of TV market research for DisplaySearch: "China is a hot growth engine for the global flat-panel TV market as the transition from CRT to LCD and plasma TVs continues to drive market growth."
For the green set, the latest shipment numbers also represent more evidence that eco-friendly LCD TVs are rapidly displacing older, lead-laden CRT models. According to DisplaySearch, worldwide CRT shipments for 2010 will only tally 32 million units, or about 15% of sales -- a shocking decline. Until a few years ago, CRTs represented more than half of all TVs shipped globally. If this trend continues, CRTs will entirely disappear from the market within the next five years or so. (We wrote about the enormous environmental problem of hundreds of millions of CRTs still in use around the world, which contain significant amounts of toxic heavy metals.)
Whether this rebound is truly sustainable is not entirely clear. In China and Japan, government stimulus activity is likely having a significant impact on TV sales as consumers take their cues from the politicians, and take their stimulus money to go buy bigger TVs or replace older CRT models.
Also, LCD makers are hardly raking in the dough as prices on these LCDs continue to fall at an annual rate of 20% to 30% when similar-size sets are compared. Consumers are making up for this decline by spending roughly 9% more on each purchase, boosting average selling price, but it's still a tough race to the bottom for LCD companies.
Other problems will likely make it even harder on the LCD makers, which really can't halt the price declines. There's a glass shortage resulting from earthquakes in Taiwan that damaged production lines, leaving factory floors literally littered with broken glass. Roughly 40% of the world's thin-film-transistor LCDs are made in Taiwan.
Additionally, a ongoing price spike in LED modules that are increasingly important in high-end LCD TVs is forcing up bill-of-materials costs. The LED module market is being pulled in multiple directions by soaring demand for not only energy-efficient LED-backlit flat-panels, but also laptops and industrial lighting systems using LEDs. The resulting increases in component prices could further accelerate an ongoing industry consolidation.
The report is very good news for big glassmakers such as Corning (GLW) and Samsung, which command significant pricing power due to the high quality of their panel-glass products. Meanwhile, BestBuy (BBY), Wal-Mart Stores (WMT) and other big consumer electronics retailers continue to push bargains in flat-panel TVs as the growth machine that will power the industry out of the recession.
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