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LCD price drops may soon come to end

Want a cheap TV? Buy now

Users looking for a new LCD TV might want to consider a purchase over the next few months, because rapid price declines could very well be over.

The price of large-sized LCD panels used in televisions fell by more than 25 percent from the first to the second quarters of this year, according to market researcher WitsView.

The markdowns create the potential for bargains over the next few months because the LCD panel is by far the most expensive part of the TV.

Trouble in the industry started with the World Cup, according to WitsView. LCD panel makers hiked production in anticipation of strong demand for LCD TVs ahead of the popular tournament, but it appears users simply didn't do as much shopping as anticipated.

3M blamed LCD price declines for part of its earnings shortfall in Q2. The company supplies LCD makers with optical film.

Instead of strong demand, LCD TV sales sputtered during the football tournament, flooding the market with excess products and driving down prices. Prices of LCD TVs are actually almost always falling as makers improve efficiency at factories and pass on savings to users, but rapid declines such as what the industry saw over the previous three months don't come often. The rapid decline sank panels makers' earnings, prompting some to pare production.

While slowing production lines can help avoid a serious glut, it didn't stabilise prices in Q2. But continued vigilance among panel makers and anticipated greater demand among consumers in Q3 are expected to firm prices and could send them slightly higher.

LG Philips LCD, one of the world's largest LCD panel makers, said it expects to see prices begin to stabilise and LCD TV sales grow throughout the second half of the year, particularly in Q4.

LCD prices fell off so sharply during Q2 that the company posted a loss of 322bn Korean won (about £180m), down from a profit of 48bn won (£21m) in Q1.

One of LG Philips LCD's top rivals, AU Optronics, even predicted a further dip in panel prices in Q3.

The company said the price of LCD panels used in TVs was likely to fall by a few percentage points during the three months ended 31 September as a result of high inventories in the market.

"Prices are falling faster than we can reduce costs," Hui Hsiung, an executive vice-president at AU, said at a news conference. He added that a rebound isn't likely until September.

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