LEDs pump life into flat-screen TV market

SEOUL/TAIPEI Fri May 22, 2009 4:49am EDT

Samsung Electronics' LED televisions are displayed for visitors at the headquarters of Samsung Electronics in Seoul May 20, 2009. Many analysts say companies such as Samsung Electronics and rival Hynix and panelmaker LG Display in South Korea are attractive buys as these leaders could expand market share further. Picture taken May 20, 2009. REUTERS/Jo Yong-Hak

Samsung Electronics' LED televisions are displayed for visitors at the headquarters of Samsung Electronics in Seoul May 20, 2009. Many analysts say companies such as Samsung Electronics and rival Hynix and panelmaker LG Display in South Korea are attractive buys as these leaders could expand market share further. Picture taken May 20, 2009.

Credit: Reuters/Jo Yong-Hak

SEOUL/TAIPEI (Reuters) - Leading flat-screen TV makers, whose sales are holding up even in the global downturn, are placing bets on TVs using light-emitting diode (LED), hoping the slimmer, more power-efficient sets help them fight falling prices and expand their market shares.

Once the preserve of smaller tech gadgets such as toys, music players and mobile phones, the LED-backlit LCD screen technology is creeping into the TV market.

Samsung Electronics, Sony and other major TV vendors see a bright future for LED. They say TVs featuring LED backlights are about a third thinner than those lit by traditional cold cathode fluorescent lamps (CCFLs) and have a longer lifespan. They offer more vivid images, with greater contrast and color range.

"Going forward, the entire market will shift to LED. LED is the best television technology made available so far," Sue Shim, Samsung's senior vice president in charge of visual display sales and marketing, told the Reuters Global Technology Summit this week.

LCD TVs make up about 60 percent of global TV shipments, according to research group DisplaySearch. LED TV sales are expected to grow more than tenfold this year to about 2 million units out of the total LCD TV sales of 120 million.

Shim said LED TVs save 40 percent more energy compared with conventional LCD TV models, appealing to consumers who increasingly care about green energy and cost savings. Another advantage is that LED contains no harmful mercury.

Research firm iSuppli forecast LCD TV LED revenue will soar nearly nine times to $1.4 billion in 2012 from $163 million in 2009. Globally, LEDs are being increasingly used in a wide array of applications including lighting, notebooks, mobile phones and televisions.

LED TVs could be a boon for leading TV brands, which are struggling to cope with falling prices. Prices of conventional 32-inch LCD TVs have fallen 30 percent in the past year.

But the jury is still out on how fast the market can take off, given significant price premiums.

HIGH PRICES STIFLE GROWTH

The price premium for 40- to 42-inch LCD TVs using LEDs is about $200-$500 compared to CCFL alternatives, iSuppli says. Given how often standard LCD models are discounted, LED TVs could cost almost double the regular price.

"The price premium should narrow to below 50 percent by the second half of next year, then the market will bloom," said Soh Hyun-cheol, an analyst at Goodmorning Shinhan Securities.

"Makers such as Samsung and LG Electronics will aggressively push LED TVs next year. LED may well replace CCFL in most LCD TVs in the next four-five years."

Samsung, whose top-end LED TVs cost as much as $700 more than CCFL models, argues many consumers are willing to pay a sizeable premium for the improvement in picture quality. It sold 200,000 units of LED models in six weeks from launching the products in March.

"One of our consumer surveys showed 78 percent of them were willing to pay up to 50 percent premium," said Shim of Samsung.

The shift in the market will also help makers of LED-backlit TV panels, including Samsung and its Taiwanese rivals AU Optronics and Chi Mei Optoelectronics.

"It is a new market but we think from next year the market will start taking off," AU executive vice president Paul Peng said at the Reuters Global Technology Summit. AU supplies panels to top TV brands, including Sony and Samsung.

"If the LED technology can improve further and LED prices can really go down, the LED TV market will grow very fast."

By 2011, all AU's LCD screens for laptops will have LED backlights and some 10 percent of its TV screens will be LED models next year, Peng said.

But some players such as LG Display, the world's No. 2 LCD maker behind Samsung, remain cautious.

"I doubt the gains in slimness and power consumption will justify such price premiums to the eyes of rational consumers,"

LG Display CEO Kwon Young-soo said at a recent press event. "Design-oriented consumers will take it."

(For summit blog: blogs.reuters.com/summits/)

(Editing by Anshuman Daga)