iSuppli Trims LCD-TV Forecast, But Sees Continued Growth (December 2)

El Segundo, Calif. - In light of the current economic and financial crises, iSuppli Corp. has trimmed its forecast for LCD-TV shipments, but still anticipates growth in 2008 and 2009, the research company announced November 26.

iSuppli now forecasts global LCD-TV shipments will amount to 93.4 million units in 2008, down nearly 6 percent from its previous prediction of 99 million. iSuppli also reduced its previous forecast of 124 million units for 2009 to 112.6 million units for the year.

Despite this more subdued outlook, worldwide LCD-TV shipments still will rise 18.9 percent in 2008 and by 20.5 percent in 2009.

"The economic downturn in the United States and Europe has had a knock-on effect on global economies, spurring a slowdown in Gross Domestic Product (GDP) growth, an increase in inflation and a deceleration in consumer spending around the world," said Riddhi Patel, principal analyst, television systems, for iSuppli. "The current crisis is impacting spending in all markets, including LCD TVs. The continued impact of the recession and credit crunch in the United States and Europe and rising inflation in many emerging markets will slow down sales growth for LCD TVs in 2009 as well."

However, this slowdown won't be sufficient to cause an annual decrease in unit shipments in 2008 or 2009.

"LCD-TV shipments will continue to rise due to strong consumer interest and declining Average Selling Prices (ASPs) for sets," Patel noted. "Furthermore, iSuppli expects the major brands' marketing and promotional efforts will fuel demand."

iSuppli anticipates the fourth quarter of 2008 will be weak for LCD-TV sales compared to previous expectations.

While sell-in, i.e., OEM shipments to the sales and distribution channels, will continue to be robust, sell through -- i.e., consumer purchases -- will be weak. This implies that in early 2009 the channels will be holding more than nine weeks of inventory, a level that could vary by region. To clear out the existing inventories, the channels will be forced to reinstate aggressive prices that normally are seen only during the peak holiday season between Thanksgiving and Christmas.

The first half of 2009 is expected to bring a slowdown as well, because most regions will continue to struggle due to the current financial environment. Conditions are expected to improve in the second half of 2009 because the mature regions will begin to show first signs of a recovery during the third quarter.

The recovery and the very low pricing for LCD TVs -- such as $400 for a 32-inch set or $600 to $700 for a 40/42-inch LCD TV -- will fuel consumer demand. By the third quarter of 2009, the availability of panels at aggressive prices, rock-bottom retail ASPs and the economic turnaround will combine to fuel a resurgence in demand for LCD TVs.

"Before the recession hit, 2009 was expected to be a year when the TV market would grow substantially because of the large number of replacement purchases in the mature regions as well as in economically emerging nations," Patel said. "Moreover, the downturn had been expected to last only a few quarters, and was not believed to be as severe as it now appears."

iSuppli's updated forecast for LCD-TV shipments in 2009 has been reduced by 10 percent, given that the economic recovery will take longer than expected. Starting in 2010, the market will bounce back and the demand for LCD TVs will pick up."

The factors leading to this rebound will include: continued declines in prices; new panel production capacity; brand and retailer commitments to sell more LCD TVs; and increased consumer demand.