Light shone on LCD shortage tunnel

An ongoing shortage of LCD parts - further exacerbated by a major maker's decision to halt external supply - may be partly relieved in the projection sector by products tipped for a 2004 release.

OEMs globally are clamouring for LCD panels, which require 60 percent less space, are more energy-efficient and support higher-quality images than comparable CRT screens. LCDs are in demand for incorporation in projection equipment, notebooks and flat panel digital TVs.

However, Brent Reed, country manager at projection and display specialist InFocus, said products soon to be released could provide alternatives to sourcing LCDs from two main suppliers Sony and Epson. Sony had as a result of the shortage recently ceased to supply outside its own needs.

InFocus was planning to introduce one in December that could compete in the market against LCD or plasma screens, he said.

'It will be interesting - the market will force things and the display market is going to continue to build and take off,' he said 'A new product of ours - we haven't named it yet - we've taken the engine of one of our home theatre projectors and re-engineered an optical design.'

Reed said it was likely that InFocus would work with some channel partners to distribute the new product.

'I know we're talking to some, but don't have firm details,' he said. 'We are working in partnership with people like CA Electronics in industrial design of rear projection TV that will have a product that uses our engine.'

James Waldron, senior business display product manager at Sony, said the LCD shortages could shake up device manufacturing in general.

'Sony and Epson have been making the LCD panels, but we have made a decision from April that they won't be supplying for any other vendors, because they don't have the capacity,' Waldron said. 'That also leaves Epson in the position of having to supply all the other vendors for panels.'

Down the track, however, new technologies such as micro-displays which offered stronger performance for lower cost without using LCD or Digital Light Processing (DLP) would help re-route demand.

The LCD shortage has also been causing large backorders for notebook vendors in Australia and overseas as well as in the growing market for digital home entertainment devices.

Mark Whittard, national marketing manager at Toshiba Australia, said LCD shortages were affecting four or five models out of the vendor's 26 notebook skews.

But, with notebooks, the global shortage was mainly limited to 14in screens, he said.

'There is a global shortage of 14in panels that affects all vendors,' Whittard said. 'It's an opportunity for the channel to put its prices up.'

When notebooks with 15in screens became popular about a year ago, he said, demand fell for those with 14in displays. As a result, vendors dropped their prices to clear the older inventory - sparking a scramble for products with the 14in LCDs.

'The price gap escalated, so that brought a surplus in 14in screens. Then the market shifted back again, so [vendors] lowered costs and a sub-$2,000 product was created,' he explained. 'It's supply and demand, but the difference in price between 14 and 15in screens today is still about US$30.'

Whittard said the notebook LCD shortage had been exacerbated by the high demand for LCDs in other hardware categories, such as projection and desktops.

'In Japan, for instance, the poker machines use LCD panels in the game called Pachinko, so there's a number of reasons for the demand,' he said.

Depending on where in the world a vendor sourced LCDs, there were only a few LCD suppliers they could buy from, he added.

However, he predicted that the notebook market would soon re-adjust. 'It is short-term and there is an opportunity for the channel to get some margin,' Whittard said.