Prices for 42-inch panels may fall to US$ 700 before the fourth quarter of 2006, despite being priced at US$ 800 in the second quarter, already below the cash-cost of 42-inch panels from LG.Philips LCD, the company said at its investors conference in the second quarter.

Prices for 42-inch panels may fall to US$ 700 before the fourth quarter of 2006, despite being priced at US$ 800 in the second quarter, already below the cash-cost of 42-inch panels from LG.Philips LCD, the company said at its investors conference in the second quarter.

The ASP (average selling price) of the segment was US$ 780 in the first half of July, down US$ 10 from that in the second half of June, according to WitsView Technology.

WitsView expects the ASP of 42-inch panels to continue falling through the fourth quarter, but the price drop will be less significant in the fourth quarter, compared with that in the second and third quarters, since TV demand will pick up in the fourth quarter.

Sources indicated that the trend to reduced prices is not caused by a supply-demand imbalance but by the 42/40-inch TV-panel war between LG.Philips LCD and Samsung Electronics.

LG.Philips LCD has been aggressively lowering the quotes for its 42-inch panels, and the price difference between 42- and 40-inch panels is only US$ 30, now, sources said. However, LG.Philips LCD has higher material costs since its 7.5-generation (7.5G) plant has just entered production, the sources indicated.

In addition, industry sources estimate the 42-inch panel segment was the major reason for an 18% sequential increase in inventory to US$ 1.35 billion, at LG.Philips LCD, in the second quarter.

AU Optronics (AUO), which will see its first 7.5G plant entering volume production in the fourth quarter, will face more challenges because of the general tendency to cut prices, sources said.

AUO said it will host an investors conference on July 25 and declined to comment on prices for any segment.

AUO president HB Chen recently said AUO’s first 7.5G plant will process 10,000 glass substrates per month during the initial stage of production, while a second 7.5G plant will begin production in 2007, with the combined capacity of the two 7.5G plants at 120,000 substrates per month.