Sharp Corp, Japan's largest liquid-crystal display maker, forecast an industrywide shortage of large flat panels later this year as computer makers shift to thinner monitors and rivals in Japan pare production.
"Customers will rush to get [large] screens in the fourth quarter," Shigeo Misaka, a Sharp senior executive vice president, said in an interview. Misaka, who said flat-panel prices began rebounding last month, expects prices to extend gains in the second quarter and third quarter.
Prices of large LCDs -- used mainly in computer monitors -- fell by as much as 65 percent last year, Misaka said, as rivals in South Korea and Taiwan expanded capacity, flooding the market.
With computer makers like Apple Computer Inc and Sony Corp now using flat panels and slimmer TVs gaining consumer acceptance, demand is beginning to match production.
"The demand and supply balance in large-sized LCDs is improving," Misaka said. Industrywide shipments of LCD monitors will increase to as many as 24 million units this year from about 17 million last year and 7 million in 2000, he said.
Investors and analysts are skeptical. Sharp's shares fell Japanese yen 51, or 3.4 percent, to Japanese yen 1,456, contributing to the company's decline of about 5 percent since Jan. 1. The Nikkei 225 stock average has fallen 3.2 percent in the same period.
"When the whole PC market isn't expanding, it's hard to conceive that computer makers will stop asking for lower component prices," said Hiroyuki Yoshida, a senior research analyst at Meiji Dresdner Asset Management Co, of Sharp's outlook on LCD prices. "It's too optimistic to assume LCD prices will continue to rise."
* The company said group net income will drop to ?9.7 billion (US$74 million) in the second half to March 31, from ?16.3 billion in the first half ended September.
* Its sales declined to ?898.7 billion in the same period from ?901.3 billion in the last fiscal period.
While the price of an LCD measuring 15 inches diagonally fell to almost US$200 last year, Sharp hopes the price will recover to US$250 soon, Misaka said.
A further rebound beyond US$300 is unlikely because South Korean and Taiwanese makers may expand production and computer makers won't allow LCD prices to keep rising when PC sales this year may be little changed from last year, Yoshida said.
Some computer makers are shifting to models with a flat screen instead of bulkier cathode-ray-tube monitors to attract more consumers. Apple last week unveiled a remodeled iMac personal computer with a flat-panel display to revive sales of its flagship desktop computer.
Apple's new iMac, with a flat panel mounted on a pivoting arm connected to an oval base, will carry a retail price of US$1,299 to US$1,799. The company worked on the design for two years to integrate the flat-panel display into an all-in-one computer. The US$1,799 iMac goes on sale at the end of this month, with the cheapest model available in March.
At one of its newer LCD factories in Mie prefecture, Sharp has monthly production capacity of 90,000 sheets measuring 680x880mm. It will use all the capacity by the end of March because of rising demand, Misaka said.
To deal with a possible supply shortage, Sharp plans to take advantage of a venture with Taiwan's Quanta Computer (
Because of last year's glut of large-sized panels from rivals in South Korea and Taiwan, many Japanese makers began making smaller screens.
In the field of small-sized LCDs used in mobile phones, handheld computers, game machines and car navigation systems, price declines will probably continue this year amid competition with Japanese rivals, Misaka said.
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