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SCMP Reporter

LG.Philips Displays is betting on strong sales from China and other emerging economies to expand its market for cathode ray tubes (CRTs) and fend off the challenge from newer screen technologies.

The Hong Kong-based firm, a joint venture between South Korea's LG Electronics and Royal Philips Electronics of the Netherlands, cited growing business with mainland manufacturers as the linchpin to its first year of profitable operations.

Despite the sluggish global demand for computer monitors and increasing sales of liquid crystal displays (LCDs), LG.Philips Displays posted US$165 million in profits on revenues of US$4.4 billion last year.

A 5 per cent rise in CRT sales worldwide also helped the firm withstand competition from makers of thinner, albeit expensive, LCD and plasma display screens.

'LG.Philips Displays is a clear market leader, demonstrating impressive sales volume growth worldwide of over 65 million tubes, or 27 per cent of the global market,' chairman and chief executive Andreas Wente said.

'Last year's performance demonstrates that our company is well positioned in this competitive market.'

He noted, however, that difficult economic conditions brought down the total value of the global CRT market by about 7 per cent. This meant price cuts on products.

Since it began operations in 2001, LG.Philips Displays has been regarded as the world's largest maker of CRTs used in television sets and computer displays.

The company is estimated to produce about one in every four TV and computer monitor tubes sold worldwide.

The daunting challenge for the CRT maker comes from the computer monitor market, where LCDs are expected to dominate over the next few years.

LG.Philips Displays projected that LCDs would capture 39 per cent of the world's computer monitor market this year. That would help lower LCD prices and enable the new technology to take 64 per cent of the market by 2005. However, Mr Wente said LG.Philips Displays remained confident of its CRT focus even though main rivals Chunghwa Picture Tubes of Taiwan and South Korea's Samsung SDI were boosting their LCD product range.

Its Seoul-based sister company, LG.Philips LCD, is already regarded as the world's largest manufacturer of thin-film transistor LCD products.

While the colour display tube market for computer monitors contracted by about 12 million units last year, LG.Philips Displays managed to increase its total sales by one million units in this segment, Mr Wente said.

'CRTs remain unbeatable in terms of price and picture performance,' he said.

For future growth, LG.Philips Displays is banking on heftier global exports from Asian TV manufacturers, a growing appetite for flat, high-definition CRT-based TV sets and an increasing demand for low-priced TV sets and computer displays in emerging markets such as China, India and Eastern Europe.

More than 50 per cent of the company's sales last year came from the Asia-Pacific, thanks to an expanding list of partner manufacturers in the region.

'Currently, over 95 per cent of TV set demand is CRT-based, and this will remain strong this decade,' Mr Wente said.

In China, its largest buyers of colour picture tubes included television-makers ChangHong, TCL, Konka, Skyworth, Hisense and Haier.

Mainland customers for CRTs used for computer monitors included parent firms LG Electronics and Philips, the NEC-Mitsubishi Electronic Visual Systems joint venture and Taiwanese firm Compal.

LG.Philips Displays has about 30,000 employees worldwide and 27 factories in Asia, Europe and the Americas. The firm's mainland factories in Nanjing and Changsha account for 25 per cent of its worldwide production.

'We expect to grow our market share again this year, putting us on track to further consolidate our leading market position,' Mr Wente said.



LG.Philips counts on mainland for growth