I lost track of how many companies were showing LCD’s at CES 2007. Lot’s of no name Chinese companies have jumped into the fray, with their only differentiator being price. Sure, Sony (SNE) and others have the highest quality panels, but a large part of the growth in panels will be at the low-end of the pricing range. The result is The LCD Supply Chain gains importance as product is commoditized.
This opens up the game for multiple component suppliers to provide the guts for what are essentially white-box assemblers. Everyone is familiar with Chi Mei as an LCD supplier, but it’s clear to me that more independent channel suppliers will support the majority of growth at the low end.
One booth exhibitor told me that while Sony/Samsung and Sharp may sell their panels to third parties, only the manufacturers themselves knew the secrets to make their glass perform at the high quality associated with their brands. This creates the classic technology case where third party independent suppliers provide reference designs that allow low value add hardware assemblers to make devices that nearly match the quality of the marquee names.
The result is that superior suppliers into the commodity LCD business extract non-commodity margins. Identify those superior suppliers and you have a good investment opportunity, as they should see not just revenue growth but margin expansion over the coming years.
Expect to see some silicon or panel company become the “Intel Inside” of the commodity LCD display. Gennum (GND.TO) had some very interesting stuff and some impressive people. They were my sleeper hit of the show.
Part of a CES 2007 Summary series. Click Here for a full archive.
Full Disclosure: Author owns shares in Sony