Samsung Electronics Co and LG.Philips LCD Co, the two largest makers of flat-panel displays, say prices are starting to recoup last year's 45 percent decline.
Now, they are asking whether their Taiwanese rivals will spoil the party -- again.
"We hope they find some way not to repeat last year's situation," when prices fell by about half after six Taiwan firms opened factories, said Cho Yeong-dok, a top executive in Samsung Electronic's flat-panel division.
Samsung and LG.Philips, a venture between Europe's biggest and South Korea's No. 2 electronics firms, have long contended the world is flat. Their screens are thinner and lighter than cathode-ray tubes and are expected to be the standard for high-definition TVs, which some predict may be widespread by 2005.
Cho's comments, however, underline concern that companies in the US$10 billion industry are about to misjudge the market again.
South Korean firms may be just as much to blame: This year, Samsung and LG.Philips are opening so-called fifth-generation plants that can make as many as 16 laptop-size screens per glass sheet, compared with a maximum of six previously.
Samsung and LG.Philips say demand is overwhelming. Samsung can fill only 70 percent of the orders it's receiving these days, and is speeding up equipping its new plant which will churn out 30,000 of the larger glass sheets per month by October, Cho said.
Samsung forecasts demand will increase by between 72 percent and 74 percent this year. Supply, boosted by Samsung and a new LG.Philips plant that will make it the biggest producer by volume, will grow about 28 percent, the company estimated.
"If you don't have a fifth-generation plant coming on line this year you probably shouldn't bother," said Bruce Berkoff, LG.Philips' vice president of sales. "We are opening our factory right at the beginning of the shortage, which means we had to have the guts to invest during the glut."
The two South Korean companies and analysts agree that a screen shortage will persist until the second half of next year. The average sale price of a 15-inch screen will rise to about US$285 in the fourth quarter from a low of US$213 in the third quarter of 2001, according to UBS Warburg.
The worry: Taiwan plants now in the works will come on stream just as prices peak. Five of Taiwanese companies, including Chunghwa Picture Tubes Ltd (
"Taiwanese and Korean makers are planning to increase production," said Nobuaki Murayama, fund manager at Cigna International Investment Advisors Co. "I'm afraid we might see oversupply."
About 27 million screens will be made this year, a fraction of the 130 million personal computers forecast to be sold.
New markets -- the wider acceptance of videophones, for example -- may also boost demand for screens so thin that users can stack multiple units on a desk at the same time. High-definition televisions, which have up to five times better picture quality and sound, will also help.
Digital television also broadcasts in "widescreen" format, meaning TVs will need to be wider and larger than today's models.
"You can't imagine a 40-inch CRT -- it's too heavy," said Cho. "It takes two people to lift it. By 2005 we will all be buying LCD TVs."