Sharp explains delays in LCD demand

By James Wells

SYDNEY: Sharp Corporation of Australia has explained the reasons behind a global shortage of LCD televisions, which is expected to continue at least until June.

According to Sharp Corporation deputy managing director, Denis Kerr, delays in the supply of Sharp Aquos LCD televisions have been caused by a reconfiguration of manufacturing processes, which is designed to improve the long term efficiency of supply to the company’s three key markets – USA, Europe and Oceania.

The main reason for the delay has been the removal of assembly processes from its Kameyama plant in Japan to allow the factory to concentrate purely on glass substrate production. Once this plant stops LCD television assembly, glass substrate production is expected to increase by 15 per cent.

LCD television assembly will be relocated to various places around the globe, including former CRT factories such as Sharp’s Malaysian plant, which will act as the local hub for Australia and the rest of Oceania.

Another glass substrate production facility, called Kameyama 2, is expected to commence operating by the third quarter of this year to provide additional global supply for Sharp and its OEM customers.

“We cannot keep up with demand at the moment,” Kerr told current.com.au.

“The factory envisaged we would have a shortage from April to June this year. We have realised capacity was slightly below demand when we took orders from all subsidiaries for the soccer World Cup,” Kerr said.

Sharp expects stock to be freely available once the current assembly lines in Kameyama are converted to glass substrates production.

“Sharp’s policy is that stock will be shared equally between all hubs – Europe, US and Oceania. We are still getting stock, but all it means for Australia is that whatever we get in we will sell. We realise that there will not be any excess inventory at the end of each month.”

According to Kerr, the strong retail sales of the company’s recently-released AF series of LCD televisions has exacerbated the supply problem.

“The AF series was slow to take off because on paper it is a low resolution. At the beginning we found sales were five to one in favour of the high definition screen – now it has changed back the other way.

“When we started putting AFs on the floor, retailers and consumer realised this panel has the ability to optimise a high definition signal through its standard definition format. It has created a lot of demand and taken off much quicker than we thought.

“The reason we brought in a PAL panel was because we expected a lot of consumers watching the Commonwealth Games and World Cup to be shifting from tube to flat panel but not necessarily wanting high definition. We also saw that 80 per cent on all LCD screens sold in Europe are standard definition and not even New Zealand has high definition.

“Price has a little bit to do with it, but there is not a massive difference. The glass has a lot to do with it and so has the acceptance of the retailer. It reproduces a great signal and this has given retailers confidence selling PAL on the floor. It is a case of seeing is believing, and the retailers are now convincing the customer,” said Kerr.

There are currently three AF models in the market (26-inches, 32-inches and 37-inches).

The GA series which has been in the market for two years (26-inches, 32-inches, and 37-inches) is currently being replaced by the new AX series (26-inches and 32-inches) which has been in the market for a month.

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