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August 17, 2009

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Price rise causes cost pressure

THE surge in prices of LCD panels has caused Chinese TV makers to face cost pressure because they can't raise their prices in the fiercely competitive market, Shanghai Daily learned yesterday.

The price of 32-inch LCD panels rose from US$120 in January to about US$200 last month, an increase of about 70 percent.

The surge in LCD panel price started in April due to rising demand. In June, the average price of a LCD panel jumped by US$10 to US$15, according to DisplaySearch, a United States-based display device research firm.

"China has to establish its own advanced LCD panel lines. Otherwise, TV makers have to depend on overseas panel makers and accept the rise in prices," said Zhang Bing, an analyst at DisplaySearch.

The domestic TV makers are not making any profit from selling some sizes of LCD TVs, Xinhua news agency reported, quoting Huang Xiangping, an official with the consumer electronics department of Tsinghua Tongfang.

China, however, is still one of the fast-growing LCD TV markets due to government subsidies to boost appliance sales to rural areas, industry insiders said.

This year, sales of LCD TVs in China are expected at 23.6 million units, higher than the previous forecast of 18.8 million units, according to DisplaySearch.

This year will see Chinese LCD TV sales of 30 million units against 14 millions last year, Skyworth Group Co, a domestic TV maker, forecast.

The TV makers will not raise prices because the market is highly competitive, industry officials said.

As the TV makers' costs have risen, they will promote functions and styles to attract customers, said Paul Gagnon, an analyst at DisplaySearch.



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