Samsung sees better LCD performance no big investments
"There'll be no more fall in selling prices and earnings will improve as capacity run rates are rising, costs are falling and demand is showing improvement," Chang, president of Samsung's LCD division, said at the Reuters Global Technology Summit.
His cautiously upbeat remarks in a rare media interview contrast with a more downbeat industry view, which suggests that the global LCD TV market will shrink annually from this year between 3 percent and 4 percent.
Samsung has said for some time that the liquid crystal display (LCD) sector would improve. But now it says it is seeing the evidence.
After declining around one third over the past one year, TV panel prices are finally showing some signs of bottoming out this month.
Indeed, prices of 40-42 inch panels have risen 1 percent from late April, according to industry data. Emerging markets led by China are showing a strong recovery in LCD TV sales, making up for subdued demand in developed countries, where many consumers have already traded their bulky tube TV sets for flat-screen models.
Chang said TV sales were strong in the two weeks through China's Labor Day holiday in early May, rising 15 percent to 2.6 million units from a year earlier.
He expects to boost production in the current quarter to 90-95 percent of capacity from 85-90 percent in the previous quarter.
CREATIVE REPLACEMENT VS CAUTIOUS OUTLOOK
Samsung is known for making massive ahead-of-the-curve investment, and Chang said the company will keep investment flexible, although there was no immediate plan for massive investment for next generation technology.
Demand growth for LCD is being limited by new types of displays such as OLED, currently used in high-end smartphones but which is fast expanding into the television sector.
The next, or 11th-generation plant, would allow production of bigger-sized TV panels at a lower cost.
The 56-year-old president said its panel venture with Sony Corp (6758.T) does not have any immediate plan to make massive investments either.
The venture has cut capital by $555 million as the Japanese firm struggles with perennial losses from its TV business. Sony has also said it would not make further investment in a separate 10th generation panel venture it has with Sharp Corp (6753.T). [ID:nL3E7FP0E6]
"We have held several talks with Sony about building an 11th generation plant and technology is ready but we've agreed that there won't be massive investment for that technology any time soon," Chang said.
Currently, Sharp has the most advanced 10th generation factory but it suspended production last month following the March 11 earthquake and tsunami.
Still, Chang said the flat-screen business has solid growth potential.
"It's been mainly replacement demand which had led the LCD growth so far. But it's more likely to create new market category from now on," said Chang, who has worked at Samsung for 30 years, mainly in the flat-screen operation.
"There's going to be creative replacement leading LCD industry's growth. There's huge untapped market potential in such areas as public displays, transparent displays, and educational displays used in schools."
NEW 3D TECHNOLOGY
Samsung supplies around a quarter of large-sized LCD globally and it is also the world's No.1 TV maker.
But its dominance had been challenged this year by local rival LG Electronics Inc (066570.KS) and its panel unit LG Display (034220.KS).
LG introduced a new 3D technology called passive film patterned retarder (FPR) to challenge the industry standard of shutter-glass (SG) technology, which Samsung dominates.
LG is betting the new format will account for as much as 70 percent of the 3D TV market this year.
FPR technology is touted by some to be more consumer-friendly because the TV panels process 3D images, making eyewear for viewers much lighter and cheaper.
SG technology, on the other hand, requires battery-charged and chip-equipped glasses to process 3D images.
The shift can be a major challenge to top LCD maker Samsung, because analysts predict a gradual shift to the use of FPR. Research firm IHS iSuppli forecast FPR type will account for more than half of global 3D TV market by 2015.
Chang said Samsung had developed new 3D technology with U.S. 3D stereoscopic technology licensing firm RealD (RLD.N) that combines the two rival technologies and mass production of the new panel will start from 2013.
"Currently how to reduce production cost is the main issue because the new technology requires additional panel to process 3D signals. It will take one or one-and-a-half years to make it cheap," Chang said.
Chang expected the 3D TV market to grow to around 20 million units this year and to between 80 million and 100 million units in 2014, accounting for 30-40 percent of total TV market.
The forecast is in line with DisplaySearch estimate but slightly less bullish than iSuppli, which this month forecast that global 3D TV shipments would rise to 126 million units by 2014.
