With the price slide, demand is booming in the key battleground for TVs--flat screens in the 40-44-inch range--and analysts say makers of Liquid Crystal Displays (LCD) will probably gain ground in a market that has been dominated by Plasma Displays (PDP).

"Plasma display makers will do their best to cut costs and fend them off, but LCD makers are investing aggressively to go after the big-inch TVs and should be able to grab a good slice of that market, especially at 40 inches and just above," Hisakazu Torii, director of TV market research at DisplaySearch.

Companies such as Japan's Matsushita Electric Industrial Co Ltd and South Korea's LG Electronics Inc have preferred to use plasma screens for 40-inch or larger TV sets since they are easier to mass produce at larger sizes, giving plasma a cost advantage over LCDs.

Plasma TV sets use tiny pockets of gases to display images, while LCDs use crystals sandwiched between glass. LCDs last longer than plasma screens but are not as bright, while plasma has a wider viewing angle but consumes more power.

But prices for big LCD TVs will also come down sharply this year, as massive production ramp-ups are enabling LCD manufacturers to cut their own costs.

In 2005, the 40-inch LCD panel price dropped 36 per cent, faster than a 31 per cent fall for 42-inch plasma screens. DisplaySearch expects the panel prices to decline at a similar pace this year, with 40-inch LCDs and 42-inch plasmas both falling by about 25 per cent.

"LCD panel prices will show a moderate fall in the first half on demand ahead of the World Cup soccer tournament, but the price fall will accelerate in the second half, given ramp-up plans at makers such as LG.Philips LCD Co Ltd and Sharp Corp," said Lee Min-hee, an analyst at CJ Investment & Securities.

One company that sells both standards, Samsung Electronics Co Ltd's, currently prices its high-definition 42-inch plasma TV set around $2,600 while its 40-inch LCD TV set can be bought for less than $2,800.

"Anything 40-inch and above is still quite expensive for the consumers. We are making very active investments to bring the prices down," Chu Woosik, senior vice-president for Samsung Electronics' investor relations, said at the Reuters Global Technology, Media and Telecoms Summit in Hong Kong.

DisplaySearch predicts LCD sets will account for 50 per cent of the 40-44 inch flat TV market by 2009, compared with 6 per cent in 2005, while plasma's share will fall to 49 per cent in 2009 from 71 per cent.

"We are still selling plasma, a few products, but our focus is purely on LCD. The future is LCD. That's our decision," Fujio Nishida, Sony Corp's European president, said at the Reuters summit in Paris.

However, plasma makers say their production cost-advantage and plasma's clearer images will give them a secure place in the fast-growing market. Makers such as Samsung SDI Co, LG Electronics and Matsushita also plan heavy investments to add capacity, raising concerns among analysts about a potential glut.

"PDP makers have more room to cut prices by improving technology and saving material costs," Chris Kim, Samsung SDI's vice president of PDP sales and marketing, said at the Reuters Hong Kong summit.

OLED

The market itself is rapidly shifting, with manufacturers always looking ahead to bigger screens and better technology.

"Eventually PDP makers will have to move their focus to above 50-inch when LCDs catch up in the 40-inch level," said Michael Min, an analyst at Korea Investment & Securities.

In the race for an edge, panel makers are also investing in Organic Light Emitting Diode (OLED) display, viewed as a promising next-generation technology.

Self-luminous and paper-thin OLED screens produce brighter images, respond faster and consume less power. Makers expect OLED displays to replace LCDs on mobile phones starting next year and eventually to compete with LCD and plasma for the monitor and TV panel market.

US researcher DisplaySearch expects the global OLED market to grow to $5.1 billion in 2009 from $518 million last year.