LCD TV makers in dire straits as profits wilt

Barely three months ago, we were talking of booming times for flat-panel TV makers as competition drove sales relentlessly upwards, yet now a consumer-spending slump is combining with legal wrangles to paint a very different picture.

Japan's Sharp joined several other manufacturers at the weekend in reducing the number of LCD panels it will make in the coming months.

All in the same boat

Its production cut of at least 10 per cent puts it in line with Panasonic, Samsung, LG and AU Optronics (AUO), which have already trimmed their projections amid the sudden sales downturn.

To make matters worse, authorities in Japan, the US and EU are also investigating many of the same companies, accusing them of price-fixing in their TV businesses between 2001 and 2006.

Massive fines

Sharp and LG have already admitted their guilt and been fined – Sharp faces a levy of $120 million (£81 million), while LG has been hit for $400 million (£270 million). LG's situation is so bad it will have to pay the fine in five separate instalments.

Meanwhile, investigations are ongoing into most of the other LCD players, including AUO, Samsung, Hitachi, Toshiba Matsushita Display and Epson.

Stool pigeon

While it remains to be seen how the outcome will hurt the firms concerned, it is known that one company came forward and told the US Department of Justice about the price fixing in exchange for immunity from prosecution.

There are now suggestions that, rather than through intense competition, the halving of LCD prices seen since the end of 2006 may have been due to the end of the cosy price-fixing deals.