Taiwan and South Korea's LCD Market-Share Battle

prostoalex writes: "This lengthy article on Reuters Web site, filled with numbers and analyst references, talks about Korean and Taiwanese manufacturers starting a price war in the field of LCD. Apparently, last year all Taiwan-based manufacturers lost money, while Koreans made money, and the companies are ready to slash their prices in turn for market share." From my reading of the article, it looks like the manufacturers may actually be reluctant to trade profits for market share, but this kind of competition still sounds good for LCD buyers.

Comments

....price wars are not that good.

[jukal]

selling products under own costs is not any good for the consumer in the long run. They are not lowering the prices to do common good. Instead they do it to kill the other one and make bigger profits later by raising prices.

Re:....price wars are not that good.

[fermion]

The effect of price wars really depends on the industry. It the case of LCD display panels, I can only see it as good.

In my limited experience, I have never seen the sale price go below the base cost to manufacture that product, that is, the cost to run it through the assembly line, package it, and ship it out. What will happen, however, is that the market may not support the inclusion of research, management, and other ancillary costs. Now, if the company is well run, there will be other, generally more advance products, that can be sold to support the ancillary costs, and of course profits.

I believe this relates directly to the LCD market. It should be possible for companies to aggressively price smaller LCD monitor (less that 17"), while shifting the other cost to the bigger sizes. In fact, by keeping price of the smaller sizes unnecessarily high they limit the number of consumer who are going to shift from CRT to LCD technology, thus limiting the growth of future demand.

The LCD manufacturers are further shooting themselves in the foot by allowing the CRT manufacturer to rapidly increases the minimum acceptable monitor size, right now about 19" for about $200. The CRT manufacturers clearly understand how to use aggressive prices to keep a market. I hope the LCD manufacturers, which is rapidly becoming a very mature market, have a price war so they can learn how use such pricing to take market share.