February 27, 1997 10:30 AM PST

LCD market could get saturated

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The liquid crystal display (LCD) market may face a glut in 1998, according to a study released by a Japanese research firm.

Nomura Research Institute released a study on the LCD market based on the start-up of a number of new LCD factories, according to a report in the Nihon Keizai Shimbun, Japan's largest business daily.

NEC, Hitachi, and South Korean manufacturers expected to start up LCD factories in the second half of fiscal 1997, begetting a glut in 1998. Typically, gluts lead to lower prices for the most widely used displays. A glut in 1995 and 1996 led to dramatically lower prices for 10.4-inch active-matrix LCDs.

LCDs are used in notebook PCs. Two types of these displays predominate: high-quality active-matrix screens and lower-quality dual-scan ones. Currently, the most popular screen sizes for notebooks are 11.3- and 12.1-inch screens. The market will slowly move to larger 13.3-inch screens in the coming two years.

The Nomura study cited the fact that the semiconductor market, by comparison, goes through a "boom-and-bust" cycle every three years or so, but the LCD market is more unstable, experiencing cycles every other year.

The Nomura study stated that demand in 1996 for LCDs was 1.25 million vs. a supply of 1.05 million. In fiscal 1997, demand will likely be 1.55 million compared with a supply of 1.4 million.

The expected surge in demand for large LCDs for desktop PCs could create a shortage in fiscal 2000.


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