LG Electronics has announced plans to cut back production of plasma display panel screens as part of it efforts to improve the business performance of its display operations. The company will close the oldest of its three PDP manufacturing lines but won"t ramp-up production on its other two lines to compensate. As a result, monthly capacity will drop from 430,000 panels to 360,000 panels, which is expected to result in savings of between $22 million and $32 million per year.
Falling prices in the display market as a result of fierce competition are causing the move. Until a few years ago, the market was neatly divided between PDP and the rival LCD technology. There"s now fierce competition in the entire middle range of the market where the two overlap. PDP appears to be losing. In the first quarter of this year, shipments of PDP panels fell 1% compared to the same period last year – the first time the industry has seen a year-on-year decline, according to DisplaySearch. The market research company attributed the drop to a loss of market share to LCDs at screen sizes over 37 inches.