European LCD-monitor penetration rate slows again

DECEMBER 2--LCD panel shortages, component shortages, and ultimately monitor shortages and price rises were themes that dominated the European market in Q3 2003, according to Meko, a specialist market-research consultancy and publisher providing advice and data for the European displays market (www.meko.co.uk).

DECEMBER 2--LCD panel shortages, component shortages, and ultimately monitor shortages and price rises were themes that dominated the European market in Q3 2003, according to Meko, a specialist market-research consultancy and publisher providing advice and data for the European displays market (www.meko.co.uk). The net result was that LCD monitors took roughly the same share of the market by volume as in Q2--a repeat of what happened in Q3 2002, which was the last time that the LCD panel makers got too greedy with their profit margins.

Some seasonal factors need to be taken into account as the LCD monitor market begins to enter a more mature phase of development. For example, markets in the south of Europe continued to exhibit quarter on quarter declines in overall shipments due to the summer holiday season. The "back-to-school" sales season in some other countries such as France means that PC vendors look to achieve certain key price points and thus used CRT monitors to do so.

But elsewhere it was clearly the rise in prices and apparent shortage of 15-in. panels that meant LCD monitor unit sales accounted for only 0.7% more of the market in Q3 than in Q2. During the period, CRT monitors represented less than half the market by volume with a 47.5% share in Q3.

"There were a number of reasons for the change in market dynamics," commented Bob Raikes, Meko's MD. "In some cases, and particularly in the consumer sector, buyers are showing resistance to purchasing larger LCD screens and have adopted a 'wait and see' position--after all, prices fell again after the last round of increases," he notes and adds that "in other areas we saw a dramatic swing back to CRT monitors. For example, in the Nordic region, 52% of monitor buyers opted for LCD monitors compared to 61% in Q2."

Overall the size of the monitor market in Europe in volume terms grew by 21.4% in the third quarter compared to Q2 and by 6.3% compared to the same period in 2002. More than 8.5 million units were shipped during the three months at a street price value of just under $3 billion (or slightly more than 2.5 billion euro).

"This quarter, we saw the usual seasonal upward trend in the sale of CRT monitors, with a sequential rise also expected next quarter", noted Pete Gamby, senior analyst at Meko. "However, this quarter's increase was smaller than this time last year, with an 18.7% increase in Q3 2003 compared to a 22.8% increase in Q3 2002. The increase in CRT monitor sales was seen across all parts of Europe except in the Mediterranean region which saw a 10.5% reduction quarter on quarter", he added.

Despite the concerns over panel shortages that started to really hit hard at the end of the third quarter, LCD sales showed strong sequential and year on year growth. Compared to Q2, shipments of LCD monitors increased by 23.9% and compared to the same period in 2002, shipments nearly doubled. By screen size, only the 18.x- and the 22.x- to 24.-in. monitor categories declined sequentially. All segments showed year on year growth.

By vendor, it was Samsung that dominated the market in Q3. The Korean vendor shipped nearly 1.4 million units during the period and demonstrated more than 45% sequential growth. Year on year, the company's shipments grew by 14%. The Korean vendor dominates in most CRT monitor categories--the exception is the 21-in. and larger segment where NEC Mitsubishi and Iiyama battle for supremacy with Dell. In the LCD market, Samsung was second behind Dell overall and second behind HP in the 15.x-in. sector, but it led the 17.x-in. sector by some margin with a 12.4% share by volume.

As the "shortages" of LCD panel continue into Q4, the rankings of the top suppliers in Europe will depend as much upon purchasing power as on sales and marketing tactics--many vendors are already indicating that the stock they have for the period is sold. The discrepancy between supply and expected demand varies between 30% and 50% depending on the suppliers involved.

The forecast for supply and demand in the early part of 2004 suggest an overcapacity, and in this situation monitor makers have the chance to take the initiative and drive down panel pricing. The reasons behind the expected overcapacity include the addition of new production capacity, increasing yield rates at recently installed factories, and a slower than expected take up in demand for LCD TVs.


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